Texas Sues General Motors Over Alleged Data Privacy Violations

Texas Sues General Motors Over Data Privacy Violations

The state of Texas has initiated legal action against General Motors (G.M.), alleging that the automaker has unlawfully gathered extensive driving data from 16 million drivers and sold this information to insurance companies without obtaining proper consent. Attorney General Ken Paxton stated, “Millions of American drivers wanted to buy a car, not a comprehensive surveillance system that unlawfully records information about every drive they take and sells their data to any company willing to pay for it.”

In response to the lawsuit, a spokesperson for G.M. remarked that the company had been “in discussions” with the attorney general’s office and was currently reviewing the complaint. The spokesperson added, “We share the desire to protect consumers’ privacy.”

This lawsuit follows an investigation launched by Mr. Paxton after a report by The New York Times revealed that General Motors, along with other automobile manufacturers, had been collecting and selling comprehensive records regarding customers’ driving habits to insurance companies. This data included critical information such as the start and end times of trips, instances of hard braking, and speeding occurrences. Consequently, many customers witnessed significant increases in their insurance premiums due to the information contained in these reports.

In March, shortly after the initial report surfaced, G.M. announced its decision to cease sharing such sensitive information with data brokers. However, Texas’ legal complaint asserts that since 2015, G.M. has been selling its customers’ driving data to various outside vendors, including LexisNexis Risk Solutions, Verisk Analytics, and Wejo. These companies then utilized the data to generate a “driving score” for each customer, which was subsequently sold to insurance providers. According to the legal filing, G.M. profited significantly from these transactions, earning millions through upfront payments as well as ongoing royalties.

While LexisNexis and Verisk have not immediately responded to requests for comment, Wejo filed for bankruptcy in 2023. Customers were often enrolled in G.M.’s data collection program at dealerships, through what the lawsuit describes as a “deceptively designed sales flow” that ensured customers unwittingly signed up for G.M.’s products and the driving data collection scheme.

The disclosures related to the data collection were buried within a lengthy 50-page document, which stated that the information gathered would be utilized for purposes such as enhancing the safety and maintenance of G.M. vehicles. Customers who opted out of enrolling were often met with warnings indicating that certain safety features of their vehicles would be disabled.

The lawsuit, filed in a state district court located in Montgomery County, accuses G.M. of violating the Texas Deceptive Trade Practices Act. The state is seeking a court order that would require the automaker to destroy all driving data it has collected. Additionally, Texas is pursuing restitution for the affected customers, which includes approximately 1.8 million Texans.

In a related development, two Democratic senators, Ron Wyden of Oregon and Edward J. Markey of Massachusetts, sent a letter last month to Lina Khan, the chairwoman of the Federal Trade Commission, urging the agency to investigate the methods employed by the auto industry for collecting and sharing customers’ data.