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One week after General Motors said it would stop collecting and sharing driver data, it faces a second lawsuit over collecting that information without drivers’ consent and sharing it with third parties, which subsequently led to auto insurers justifying rate hikes.
The lawsuit, which seeks class action status, also alleges the automaker’s announcement on March 22 that it would stop collecting driver data and cut ties with two data brokers signals that GM knew it did not have its customers’ legal consent previously to collect and share their driving data.
The lawsuit, filed Thursday in the Southern Division of the U.S. District Court Eastern District of Michigan, lists Larry Reed of Michigan and Darnell McCoy Sr. of California as the initial plaintiffs.
The complaint accuses GM and its connected-services subsidiary OnStar of invasion of privacy and deceptive and unfair practices for “surreptitiously” collecting the men’s driving data “then providing reports (stripped of all context) to their auto insurers to justify a raise in their rates.”
The driving data included accelerations, hard braking and speeding, the lawsuit said. The lawyer for the plantiffs, E. Powell Miller, declined to comment.
GM spokesman Kevin Kelly told the Detroit Free Press: “We are reviewing the complaint and have no additional comment at this time.”
Florida lawsuit prompted GM move
As the Detroit Free Press reported on March 22, GM said it would stop collecting customers’ driving data after a lawsuit, filed on March 13 in the U.S. District Court Southern District of Florida, accused the automaker, OnStar and data and analytics company LexisNexis Risk Solutions of violating privacy and consumer protection laws.
In that lawsuit, plantiff Romeo Chicco, of Florida, said his insurance rates nearly doubled after GM captured and shared his driving data — which included information about his speeding, braking and acceleration — with LexisNexis, which then shared it with insurers.
At that time, GM’s Kelly said that as of March 20, “OnStar Smart Driver customer data is no longer being shared with LexisNexis or Verisk, another analytics firm that GM had used to collect and share data to help businesses manage risk. Customer trust is a priority for us, and we are actively evaluating our privacy processes and policies.”
Not necessarily admission of guilt
The 246-page lawsuit filed in Michigan on Thursday said GM’s program with LexisNexis and Verisk included about 8 million vehicles and GM’s decision to stop sharing customer driving data with the two data brokers “suggests an acknowledgment by defendants that they in fact did not have the requisite legal consent by their customers for this data sharing practice.”
The damages sought from GM and OnStar exceed $5 million and “there are more than 100 putative class members” for class action status, according to the complaint.
But just because GM ended its practice of sharing customer data does not necessarily indicate guilt, said Erik Gordon, a lawyer and a professor at the Ross School of Business at the University of Michigan.
“GM could have severed the ties because the company was worried about bad publicity or about car owners cancelling their OnStar service,” Gordon told the Detroit Free Press on Friday. “It is not an admission that GM knew it didn’t have legal authority.”
Gordon and David Vladeck, former director of the Federal Trade Commission’s Bureau of Consumer Protection during President Barack Obama’s first term and a law professor at Georgetown University, both predicted after the Chicco lawsuit that there would be more lawsuits against GM to follow.
“There will be cases coming down the pike,” Vladeck told the Free Press on March 22. “This is a serious breach by the car companies. It’s a breach of confidentiality and there are financial consequences.”
The option that wasn’t an option
This latest lawsuit also claims GM and OnStar made it so that customers unknowingly enrolled in data collecting services, thereby eliminating customer choice. It listed as an example that in 2022, GM “forced” many customers into paying for a three-year OnStar and Connected Services plan in 2022 whether they wanted it or not.
As the Detroit Free Press reported in August 2022, the automaker was tacking $1,500 onto many new vehicles’ prices to cover the connectivity package. The package is listed under options, but was not optional at all. GM confirmed it was actually standard equipment.
“Providing this connectivity standard is more convenient for our customers and provides a more seamless onboarding experience,” GM spokesman Patrick Sullivan said in an email to the Free Press in 2022. “The package has been offered as optional in the past, but going forward, it is standard on all Buick and GMCs.”
The complaint alleges GM and OnStar profited by collecting driver data and selling it. It said the plaintiffs never consented to its collection nor did they ever have a “usage-based insurance plan.” Such a plan allows an auto insurer to obtain driving information through an onboard device or mobile application to presumably offer potentially lower rates for good driving.
On March 22, GM said its policy was to share limited data with insurers through a third party, which was collected through the OnStar Smart Driver program, after a customer consented to it three times. That OnStar program is optional. It monitors driving habits to help reduce wear and tear on the car and improve driving safety and customers can unenroll at any time, GM said.
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Free Press staff editor Matthew Dolan contributed to this report.
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Become a subscriber
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