Verizon Fined $7.4M for Misusing Customer Data

http://online.wsj.com/news/article_email/verizon-to-pay-7-4-million-fine-for-using-customer-data-for-marketing-1409761548-lMyQjAxMTA0MDAwMzEwNDMyWj

by david_shaw • 12 years ago

34 18 12 years ago

online.wsj.com

bicknergseng2• 12 years ago

Oh boy... 32 minutes of revenue. That'll teach em.

iLoch• 12 years ago

Actually, time would probably be a much better way of fining companies of that size. Example: "Verizon Fined 1 Week's worth of revenue"

ezekielrage• 12 years ago

Yeah, good luck getting that passed through congress.

eli5• 12 years ago

How much do you think is appropriate? What Verizon did is clearly wrong and I'm glad the FCC is on top of it... but this ain't exactly the crime of the century.

gerner• 12 years ago

True, but it seems like this is not much a disincentive compared to the revenue potential in that data. Having worked at a number of companies that have acquired data (legally) from a fraction of this many people, one should easily be able to turn those around for a comparable amount of money. I'm not saying there's $100M of revenue here (for 2 million folks). But It seems like the penalty must be much worse than the upside to make the risk adjusted expected value work out in favor of following laws and regulations.

I might agree with you if I thought the bad press Verizon is getting was actually quite costly. But I don't.

mikeash• 12 years ago

Another comment says that it's about $4 per affected customer. Fines for this sort of thing are typically hundreds or thousands of dollars per incident.

bicknergseng2• 12 years ago

I'm no legal expert, but I'm pretty sure this is the same legal system that dolled out $1,920,000 to a non-wealthy individual for sharing some Gloria Estefan songs. Justice?

click170• 12 years ago

Why are fines not tied to a percent of revenue for a given time period?

These flat-fee fines look big to the little folks but typically are pocket change for these big companies, it should actually hurt (see punishment) when they do something wrong.

chimeracoder• 12 years ago

It's not like there isn't precedent for percent-revenue-over-time penalties in the law (albeit perhaps not by the FCC). For example, Google was ordered to pay 1.36% of AdWords revenue to Vringo[0] (though this was later overturned).

[0] http://arstechnica.com/tech-policy/2014/01/court-orders-goog...

eli5• 12 years ago

But it's not a flat fee. According to the FCC, it's actually the largest fine ever for misuse of data for marketing purposes.

delecti• 12 years ago

This works out to ~$4 per affected customer.

The issue is that they advertised other Verizon services to customers without giving them an option to opt-out. They effectively paid $4 per sales lead, and for leads to customers they already did business with, that's a pretty phenomenal deal considering the breadth of services they could then try to sell.

Figure 1/10 of those customers got a $10 monthly service and kept it for a year. That's $24m in revenue on a conservative estimate.

kyledrake• 12 years ago

Can I fine the NSA for mis-using customer data?

spacecadet• 12 years ago

yeah seriously- the government will demand user data and then fine the company for misusing it... corrupt.

pkaye• 12 years ago

If you scale this to an average person making $50K a year, it would like a $5 fine.

BryantD• 12 years ago

The initial fine is not always the biggest cost to the company. I am not a lawyer and have not read the consent decree in this case, but typically the cost of compliance to the consent decree is significantly larger than the initial fine.

Verizon Fined $7.4M for Misusing Customer Data

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