General Motors is collecting data on its car owners' driving habits and selling that information to insurers without consumers' consent or knowledge, Texas Attorney General Ken Paxton alleges in a lawsuit filed Tuesday.
Texas is alleging GM has engaged in "false, deceptive and misleading" business practices that have impacted 1.8 million Texans who own vehicles manufactured by the automaker.
The lawsuit comes amid increased scrutiny of new car systems that can track vehicles' speeds, their locations and even how hard a driver brakes, with Mozilla last year proclaiming that new cars "are a privacy nightmare." The Texas lawsuit claims car buyers were told their driving data would help GM improve the safety and functionality of its vehicles, but weren't informed that the same data would also be sold to insurers.
"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," Paxton said in a Tuesday statement about the lawsuit.
The lawsuit comes at a time when consumers have been slammed with sharply higher insurance costs, with car coverage jumping 19% in July compared with a year earlier. One reason is due to riskier driver behavior, experts have told CBS News.
In June, Paxton had opened an investigation into several car makers over claims they had improperly collected data about drivers from their vehicles and then sold the information to other companies.
"We've been in discussions with the Attorney General's office and are reviewing the complaint. We share the desire to protect consumers' privacy," a GM spokesperson told CBS News in a statement.
Telematics data and insurance rates
The data collected by GM was allegedly sold to companies including LexisNexis Risk Solutions and Verisk Analytics, the lawsuit alleges. That data allows companies to create a driving score for individuals, with information on driving habits deemed bad, like late-night trips, sharp turns and hard braking, factored into the analysis, the lawsuit claims.
Such information, called "telematics" data, can be used by insurers to set auto coverage rates, according to NerdWallet. Ideally, customers should be aware that their data is being tracked and analyzed by insurance companies, with the promise that good driving habits will be rewarded with lower rates.
But a New York Times investigation revealed that some drivers aren't aware their data is being tracked and used in such ways, with one driver telling the publication that he felt a "betrayal" when he learned LexisNexis had compiled 130 pages about his driving habits. He learned of the report after his car insurance had jumped more than 20%.
In the Tuesday lawsuit, Texas alleges that GM "profited handsomely" by selling driver data to insurance companies, while neglecting to inform car owners that their information could be sold to other businesses.
"At no point did General Motors inform customers that its practice was to sell any of their data, much less their driving data," the lawsuit alleges. "Nor did General Motors disclose that it had contracts in place to make its customers' driving scores available to other companies."
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