FYI: General Motors Faces Lawsuit in Texas Over Alleged Sale of Driver Data Leading to Increased Insurance Premiums
General Motors (GM) is currently embroiled in a legal battle as the state of Texas has filed a lawsuit against the automotive giant. The suit alleges that GM sold comprehensive driving records to insurance companies, causing insurance premiums for consumers to spike or coverage to be dropped altogether. This information comes from a report by the New York Times on Tuesday.
Allegations and Collected Data
The lawsuit highlights that GM utilized its OnStar telematics system to accumulate data from about 16 million drivers. This data was allegedly sold to insurance firms, revealing intimate details such as individual driving behaviors, trip start and end times, exceeding speeds of 80 mph, and instances of hard braking. Additionally, factors like late-night driving habits, seatbelt usage, and “sharp turns” were monitored and sold to third-party vendors. These vendors crafted a "Driving Score," which they subsequently sold to insurers.
Revenue Streams and Consumer Deception
The New York Times reports that GM earned "millions of dollars" through various revenue channels, including initial payments from insurers and ongoing royalties. Earlier this year, it was disclosed that multiple car manufacturers had been selling driving data to construct detailed driver profiles via LexisNexis. Neither the Texas lawsuit nor these previous revelations suggest drivers were aware their data was being sold—a practice purportedly in place since 2015.
Misleading Practices
The suit claims that GM employed misleading tactics to rope customers into its OnStar products, such as through mobile apps and connected vehicle services. These disclosures were reportedly buried within over 50 pages of paperwork that customers needed to complete to finalize their car purchases. The privacy notices and user terms, as per the lawsuit, were presented in a confusing manner that masked the true intent behind data collection.
Perceptions vs. Reality
GM marketed OnStar as a robust system designed to enhance vehicle safety and user convenience. OnStar’s perceived benefits included theft protection, roadside emergency assistance, automatic crash response, and alerts to emergency services. However, the lawsuit asserts that GM never transparently communicated its data-selling practices to customers.
Legal Repercussions
Reacting to the lawsuit, GM stated that it is currently reviewing the complaint. The state of Texas is seeking a jury trial, civil penalties against GM, and the destruction of all data collected through these practices.
Conclusion
This lawsuit against General Motors underscores a significant issue concerning consumer data privacy and transparency. The outcome of this legal case could set a precedent for how driving data is managed and disclosed in the automotive industry, potentially influencing policies and ethical practices surrounding data privacy.
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Steven Hale, Editor of Automotive.fyi
