Verizon Pays $7.4 Million Fine for Violating Customer Privacy

Sep 03, 2014 03:08 PM EDT | Jordan Ecarma

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Verizon has agreed to pay a $7.4 million settlement following a federal probe that revealed the company used personal information from customers for advertisements without their permission.

A Federal Communications Commission investigation found that Verizon didn't tell 2 million new subscribers about their privacy rights and used their information to try to sell them more products, Bloomberg reported.

According to the FCC, Verizon failed to send opt-out notices to customers beginning in 2006, an omission that went on for "several years."

Verizon will additionally inform customers of their rights on each bill issued in the next three years, said an FCC news release.

"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," Travis LeBlanc, acting chief of the FCC's enforcement bureau, said in a statement quoted by Bloomberg and other media.

Verizon has called the privacy invasion a mistake and said it notified the FCC after the breach was found. The company inadvertently didn't issue the necessary notice before sending ads to certain customers in an attempt to sell them other Verizon services, spokesman Ed McFadden told Bloomberg in an email.

Phone companies are only allowed to tap billing and location information to use in targeted ads after obtaining permission from customers, CNNMoney reported.

Verizon did not experience a data breach, and no information was shared with third parties, the company has said.

The FCC has also required Verizon to "put systems in place to monitor and test its billing systems and opt-out notice process to ensure that customers are receiving proper notices of their privacy rights," said the news release.

Any issues must be reported to the FCC within five business days.

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