The Lawsuit That Had to Happen

A lawsuit should clarify a key issue in auto telematics... but perhaps at the cost of a class action and probes by the FTC and Congress.

woman driving car

When I drive my car, who owns the data about the trip? Me? The car manufacturer? My insurer? A data broker?

Even as I've welcomed the spread of telematics, which I believe will not only let insurers price risk more accurately but will lead to safer driving, that question about data ownership has hung over the issue for me. 

It would seem that the answer is obvious: I own the data. Car makers, insurers and data brokers need my consent to learn about when, where and how I drive. But many companies, in their thirst for data, seem to be hiding the request for consent deep in the fine print that no one reads when signing up for insurance or downloading an app from a car maker or insurer — and reporting suggests that many customers are signed up for tracking without their agreement. 

A lawsuit filed recently against General Motors and LexisNexis Risk Solutions is likely to finally bring the consent and data ownership issues to a head. The plaintiff seeks class action status for the suit, and there may well be investigations by the Federal Trade Commission and Congress — one senator has already raised the prospect. 

At the very least, I suspect that anyone wanting data from drivers will have to be completely up-front about requesting consent. No more hiding in the fine print. At worst... who knows? Class actions and federal investigations can take unexpected turns.

Push, meet shove. 

"Florida Man" stories about people doing wildly irrational things there have been a meme for more than a decade now. There's even a website where you can find a headline from your birthday that becomes your link to Florida Man history — mine is "Florida Man Bites Neighbor's Ear Off Over a Cigarette." So I don't expect to get more than a chuckle out of headline that begins with the term, but then I saw this one in the New York Times last week:

Florida Man Sues G.M. and LexisNexis Over Sale of His Cadillac Data

Romeo Chicco’s auto insurance rate doubled because of information about his speeding, braking and acceleration, according to his complaint.

The story says Chicco applied for auto insurance in December and was startled when seven companies rejected him. When he finally obtained insurance, it was at nearly twice the premium he had previously paid. He asked his agent for an explanation and was steered to his LexisNexis file, where he learned, as the story puts it, that "his 2021 Cadillac XT6 had been spying on him."

For those familiar with auto telematics, the "spying" was routine. General Motors, which makes Cadillacs, had reported to LexisNexis about 258 trips that Chicco had taken over the past six months — how far he traveled, when he traveled and whether he was speeding, hard braking or accelerating.

The issue is whether GM and LexisNexis had his permission to gather the data and make it available to insurers. Chicco says GM eventually told him he signed up for OnStar's Smart Driver program, whose contract says the company can share data with third parties, but Chicco denies doing so. GM provided general comments to the Times about the program but wouldn't comment on Chicco's specific complaints. LexisNexis declined to comment to the Times.

"'What no one can tell me is how I enrolled in it,' Chicco said. 'You can tell me how many times I hard-accelerated on Jan. 30 between 6 a.m. and 8 a.m., but you can’t tell me how I enrolled in this?'”

A second New York Times article last week — yes, this seems like a theme they're going to dog — expanded the concerns far beyond Chicco. This article, too, began with a story of a driver who saw his premium soar because of information he didn't know his car was sharing — in this case, the driver was a 65-year-old who had never been responsible for an accident. Then the article zoomed out:

"Car companies have established relationships with insurance companies, so that if drivers want to sign up for what’s called usage-based’s easy to collect that data wirelessly from their cars.

"But in other instances, something much sneakier has happened.... In recent years, automakers, including G.M., Honda, Kia and Hyundai, have started offering optional features in their connected-car apps that rate people’s driving. Some drivers may not realize that, if they turn on these features, the car companies then give information about how they drive to data brokers like LexisNexis.

"Automakers and data brokers that have partnered to collect detailed driving data from millions of Americans say they have drivers’ permission to do so. But the existence of these partnerships is nearly invisible to drivers, whose consent is obtained in fine print and murky privacy policies that few read.

"Especially troubling is that some drivers with vehicles made by G.M. say they were tracked even when they did not turn on the feature — called OnStar Smart Driver — and that their insurance rates went up as a result."

The reporter added that she has a GM car and signed up for Smart Driver but received no notice that her driving data could be shared with insurers. A GM spokeswoman pointed to OnStar's privacy statement, but the reporter said the relevant section "does not mention Smart Driver. It names SiriusXM as a company G.M. might share data with, not LexisNexis Risk Solutions."

For this article, LexisNexis provided a statement that said the company has “strict privacy and security policies designed to ensure that data is not accessed or used impermissibly.”

To me, the key result of whatever lawsuits and investigations ensue will be that all the players in the telematics market will need to be much more forthcoming about what data they're collecting and how they're going to use it. And that's a good thing, even if the adjustment will be painful for some.

Telematics will continue to promote safety by better identifying bad drivers and assigning them higher premiums. Even if more dangerous drivers opt out of sharing data, they'll still see their rates rise as better drivers opt in and leave generally riskier drivers behind. 

But there will surely be some bumps in the road before telematics settles into that generally rosy future. Just look at the apocalyptic ending to that first New York Times piece: 

"David Vladeck, a Georgetown law professor who previously ran the bureau for consumer protection at the Federal Trade Commission, said... he would expect an investigation by the F.T.C., as well as lawsuits by consumers against the automakers and data brokers.

“'Just wait for the avalanche,' he said. 'It’s coming.'”