Leaders Demand Thorough Investigation of Car Manufacturers’ Sale of Customer Data to Insurance Companies
Car manufacturers have come under fire from U.S. legislators for continuing to sell customer driving data to insurance companies. Senators Ron Wyden (Oregon) and Edward J. Markey (Massachusetts) have called for the Federal Trade Commission (FTC) to conduct an in-depth investigation into this practice, which they argue is deceptive and harmful to consumers.
Concerns over Data Collection and Usage
The senators’ letter to FTC Chair Lina S. Khan raises concerns that carmakers are collecting and selling sensitive driver data, including exact time, distance, speed, and braking behavior, without obtaining informed consent from customers. This data is then provided to insurance companies, which may use it to create individual risk scores and adjust insurance premiums.
The letter specifically names General Motors, Honda, and Hyundai, as well as the data broker Verisk Analytics, as companies involved in this data-sharing practice. The senators allege that Verisk is acting as a “credit agency for drivers” and that companies have made misleading claims to customers that data collection would lower their insurance costs.
Additionally, the letter cites the use of “dark patterns” in opt-in programs, which are designed to trick consumers into unwittingly consenting to data collection. This raises concerns that customers are not fully aware of the consequences of providing their driving data to third parties.
Previous Investigations and Industry Responses
In March 2023, the New York Times reported on a widespread practice among car manufacturers to share customer driving data with data brokers like Verisk and LexisNexis. This data was then used to create individual risk scores for insurance providers, potentially leading to higher insurance rates for drivers with certain behaviors.
Following the New York Times report, General Motors announced that it had ended its partnership with LexisNexis, and Verisk stated that it had discontinued a program that “scored drivers on their safe driving habits using data from internet-connected cars.” However, recent investigations suggest that the practice of selling customer data to insurance companies is ongoing.
Calls for FTC Investigation
In light of these concerns, Senators Wyden and Markey are urging the FTC to conduct a thorough investigation of car manufacturers’ data-sharing practices. They believe that this investigation is necessary to protect consumer privacy, ensure transparency, and prevent deceptive or unfair practices in the insurance market.
The senators request that the FTC examine the following aspects of the data-sharing practice:
- Whether car manufacturers are obtaining informed consent from customers before collecting and selling their driving data
- The accuracy and reliability of the driving data being sold to insurance companies
- The potential impact of this data-sharing practice on insurance rates and consumer privacy
- Whether car manufacturers are engaging in deceptive or unfair practices in the collection and sale of customer data
The senators also call on the FTC to hold accountable carmakers and data brokers that have engaged in unlawful data-sharing practices and to take appropriate enforcement actions to protect consumers.
Conclusion
The sale of customer driving data by car manufacturers to insurance companies has raised serious concerns about consumer privacy, transparency, and fair practices in the insurance market. Senators Wyden and Markey’s call for an FTC investigation is a necessary step to address these concerns and ensure that consumers are protected.
The FTC’s investigation is expected to shed light on the extent of the data-sharing practice, the impact on consumers, and the need for regulatory action to address this issue effectively.