Verizon Agrees To Cough Up $7.4 Million To Settle FCC Privacy Probe

Verizon will pay a hefty $7.4 million fine as part of a settlement agreement with the Federal Communications Commission to end an investigation into the wireless carrier's use of personal consumer information for marketing purposes without their consent, the FCC announced today. In addition to the fine, Verizon agreed to notify customers of their opt-out rights on every bill for the next three years.

The FCC has been taking a hardline approach to the way wireless carriers do business, though most of the ire has been directed at data caps and related business practices. For example, FCC Chairman Tom Wheeler sent a strongly worded letter to Verizon in July demanding an explanation as to why it decided to throttle 4G LTE data for the top 5 percent of data users who are subscribed to an unlimited data plan.

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While Verizon's reasons for throttling customer data might be dubious, failing to give around 2 million new landline customers a chance to opt out of having their personal information shared with marketers is a bit more cut and dry.

"In today's increasingly connected world, it is critical that every phone company honor its duty to inform customers of their privacy choices and then to respect those choices," Travis LeBlanc, Acting Chief of the FCC's Enforcement Bureau, said in a statement. "It is plainly unacceptable for any phone company to use its customers' personal information for thousands of marketing campaigns without even giving them the choice to opt out."

To Verizon's credit, it typically sends opt-out notices to customers either as a message in their first bill or in a welcome letter. However, beginning in 2006 and continuing for several years after, Verizon failed to generate the required opt-out notices to millions of subscribers, the FCC said. Verizon didn't realize the mistake until September 2012, and then failed to notify the FCC until January 18, 2013.

The $7.4 million fine, which will be paid to the U.S. Treasury, is the largest payment of its kind in FCC history related to the privacy of telephone customers.