According to Reuters, New York State filed documents with the court on the 6th, advancing GM's $220 million data privacy settlement agreement.
The settlement, announced on October 29, resolves joint allegations against GM by the attorneys general of 35 U.S. states and the District of Columbia. Approximately $12.07 million will be allocated to New York State, although GM did not admit to any illegal conduct in the settlement.
Reportedly, the storm's epicenter is OnStar's Smart Driver feature, a subsidiary of GM. Launched in 2016 as a built-in vehicle app feature, it ostensibly offers free driving behavior scoring and safety improvements for car owners. In reality, it continuously records hard braking, rapid acceleration, speeding, seatbelt usage, and even precise geographic locations in the background, then packages and sells this data to two data brokers, LexisNexis and Verisk.
Data brokers process raw data into "risk scores" and resell them to insurance companies, directly affecting premium pricing. Between 2020 and 2024, GM earned approximately $20 million from selling this data.
Many car owners discovered the truth in a frustrating way: after their premiums inexplicably rose, they requested their data files and only then realized they had been "sold out."
In a March 2024 investigative report by The New York Times, car owner Kenn Dahl claimed he drove cautiously and had no accidents, yet his premiums increased by 21%. The LexisNexis report he received was over a hundred pages long, recording nearly every trip over six months, with eight different insurance companies requesting his data within a single month.
The New York State announcement also revealed that the OnStar app incorrectly displayed to over 370,000 drivers that they were not enrolled in Smart Driver, while GM was still collecting and selling their data. Even more absurdly, many car owners were unaware they had been enrolled; dealership salespeople received commissions for each successful registration, turning user consent into an accessory to sales performance.
After the March 2024 report exposed the issue, GM cut ties with the two brokers that same month and completely shut down Smart Driver in April, but accountability measures followed swiftly.
In August 2024, the Texas Attorney General filed the first lawsuit, revealing that GM had collected data from over 14 million vehicles nationwide. This January, the U.S. Federal Trade Commission (FTC) issued a final order prohibiting GM and OnStar from sharing location and driving behavior data with consumer reporting agencies for the next five years, imposing a compliance consent order lasting up to 20 years.
In May, California reached a separate $12.75 million settlement with GM. Combined with the $220 million from the 35-state coalition, GM's "data business" has thoroughly become a money-losing venture.
Oregon Attorney General Dan Rayfield, who led the state coalition, stated, "People are buying cars, not trackers." Under the settlement terms, GM must obtain explicit consent from car owners before collecting or sharing driving and location data in the future, limit the scope of data collection, and introduce third-party organizations to assess its privacy compliance programs.
A GM spokesperson responded that the company discontinued Smart Driver in 2024, subsequently simplifying its U.S. privacy statement, establishing a Consumer Privacy Center, and strengthening internal controls.
Ironically, for data revenue amounting to just a few dollars or even cents per vehicle, GM sacrificed brand trust, endured two years of lawsuits, and faced nearly $240 million in penalties. GM's move can be considered a case of losing big over small gains.