FYI: Recent revelations indicate major car manufacturers are collecting and selling drivers’ data to insurance companies at a surprisingly low rate, raising significant privacy and financial concerns.
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## Automakers Under Scrutiny for Selling Drivers’ Data Cheaply
In a startling disclosure, a letter from two U.S. senators to the Federal Trade Commission (FTC) has unveiled troubling practices involving data collection from car manufacturers. Senators Ron Wyden of Oregon and Edward J. Markey of Massachusetts, who are staunch privacy advocates, revealed that driving data from vehicles is being sold to insurance companies for minimal amounts.
### The Data Collection Revelation
The letter, filed on July 26, accuses major automakers like General Motors, Hyundai, and Honda of gathering detailed driving data from their customers. This includes how quickly they accelerate, the force with which they brake, and the frequency at which they exceed the speed limit. This information is then sold to insurance companies to evaluate driver risk, raising serious privacy concerns.
### The Financial Insult
One of the most shocking aspects of the senators’ investigation was how little financial gain these companies received in return for such sensitive data. Over a span of four years, Honda received just $25,920 from data analytics company Verisk, for information on a staggering 97,000 cars, averaging to about 26 cents per car. Similarly, Verisk paid Hyundai just over $1 million over six years, which amounts to a mere 61 cents per car.
GM did not specify the exact amount, but reports suggest that it sold data from over 8 million cars for “just under a few million dollars.” Furthermore, the manner in which these companies notified their customers about the data collection was opaque at best. While Hyundai collected data from every internet-connected car, GM and Honda required customers to opt-in, a method that Senator Wyden described as misleading.
### Response and Current Practices
Following the initial report, General Motors has ceased collecting driving data. However, in correspondence with the FTC, GM revealed that it still shares location data, and the only way to prevent this is by disabling the car’s internet connection. GM has admitted that it has not sought customer consent for sharing their vehicle’s location data. In response, both Hyundai and Honda issued statements to The Times.
Honda spokesperson Chris Martin emphasized that while Verisk supplied driving scores to customers, “no identifiable consumer information was shared with any insurance company” without customer consent. Hyundai also provided clarity, with spokesperson Ira Gabriel stating that their connected-car service, Blue Link, informs customers about data sharing with Verisk upon activation. Verisk shares data with insurers only with customers’ consent, Gabriel confirmed.
### Calls for Further Investigation
This is the third letter from Congress urging the FTC to investigate data collection practices. Senators Wyden and Markey insist that Americans’ driving data should not be sold without explicit consent. They argue that it is particularly offensive that automakers, who sell expensive vehicles, are exploiting personal data for marginal profits.
### Conclusion
The practice of selling driving data raises significant ethical and privacy issues. While the financial gains for automakers are minimal, the potential ramifications for customers are substantial. It remains to be seen how the FTC will respond to these calls for investigation and what future regulations might arise to protect consumer data more robustly.
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Donald Smith, Editor of Automotive.fyi
