General Motors collects data on the driving habits of its car owners and sells that information to insurers without consumers’ consent or knowledge, Texas Attorney General Ken Paxton alleges in a lawsuit filed Tuesday.
Texas alleges that GM engaged in “false, deceptive and misleading” business practices that affected 1.8 million Texans who own the automaker’s vehicles.
The lawsuit comes amid increased control of new car systems that can track vehicles’ speed, their location and even a driver’s braking force, with Mozilla announcing last year that new cars were “a privacy nightmare.” The Texas lawsuit alleges that car buyers were told their driving data would help GM improve the safety and functionality of its vehicles, but were not 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 illegally records information about their every trip and sells their data to any company willing to pay for it,” Paxton said in a statement released Tuesday about the lawsuit.
The lawsuit comes at a time when consumers are facing sharply increased insurance costs. Car insurance rose 19% in July compared to the previous year. One reason for this is riskier driving behavior, experts have told CBS News.
In June, Paxton launched investigations into several automakers, accusing them of improperly collecting driver data from their vehicles and then selling the information to other companies.
“We have had discussions with the Attorney General’s Office and are reviewing the complaint. We share the desire to protect consumer privacy,” a GM spokesperson said in a statement to CBS News.
Telematics data and insurance tariffs
The data collected by GM was allegedly sold to companies such as LexisNexis Risk Solutions and Verisk Analytics, the lawsuit says. This data allows the companies to create a driving score for individuals, incorporating information about what are considered poor driving habits such as nighttime driving, sharp turns and heavy braking into the analysis, the lawsuit says.
Such information, called “telematics” data, can be used by insurers to set car insurance premiums, according to NerdWallet. Ideally, customers should be aware that their data is being tracked and analyzed by insurance companies, and promised that good driving behavior will be rewarded with lower premiums.
But a New York Times investigation found that some drivers are unaware that their data is being tracked and used in this way. One driver told the newspaper he felt “betrayed” when he learned that LexisNexis had compiled 130 pages of data on his driving habits. He learned of the report after his car insurance rate increased by more than 20%.
In Tuesday’s lawsuit, Texas claims that GM made “good profits” by selling driver data to insurance companies without informing car owners that their information could also be sold to other companies.
“At no time did General Motors inform its customers that it was its practice to sell their data, let alone their driving data,” the lawsuit states. “Nor did General Motors disclose that it had contracts in place to make its customers’ driving records available to other companies.”
