Verizon racks up $1.35M fine for violating consumer privacy

Federal regulators are getting serious about protecting consumer privacy online and have settled an investigation with Verizon over its use of "supercookies," which track users' online whereabouts.

How much does your privacy cost? A cool $1.35 million, according to the Federal Communications Commission.

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Verizon will pay a $1.35 million fine for use of permanent cookies that tracked customers' web activity.

Verizon

On Monday, the Federal Communications Commission said it had reached a deal with Verizon over the company's use of a technology that allowed marketers to track customers' web browsing so they could provide more targeted advertising. The so-called supercookies were hidden bits of code that couldn't be easily erased when consumers cleared their browsing history.

As part of the agreement, Verizon will pay the $1.35 million fine and shift from an opt-out policy to a more explicit opt-in policy for consumers. Now it will only share "supercookie" data with third parties if customers have decided to participate. The company will still be able to use the "supercookie" tracking information when customers connect to Verizon's corporate services to market its own services to its customers.

The settlement with Verizon comes as the FCC prepares to take a more active role in consumer privacy by making sure broadband and wireless companies safeguard consumers' personal data. While the Federal Trade Commission has historically been the primary watchdog for online privacy, the FCC is preparing to take on this role following the passage of Net neutrality regulation a year ago. The agency is in the midst of preparing a proposal that will outline how the privacy regulation will be adapted for the Internet age.

"Consumers care about privacy and should have a say in how their personal information is used, especially when it comes to who knows what they're doing online," FCC Enforcement Bureau Chief Travis LeBlanc said in a press release.

The issue of privacy has risen to the forefront thanks to the ongoing fight between Apple and the FBI over the government's attempt to compel the company to help break into an iPhone used by one of the terrorists involved with the December San Bernardino, California, shootings. While the FBI argues it only wants access to one phone, Apple believes this is a broader issue involving the privacy of all mobile devices.

The Verizon fight isn't anywhere near as dramatic. Browser "cookies" are tiny bits of text stored on your device by your browser. They contain information about the websites you've visited and how long you stayed on those sites, along with other information about your browsing activities. "Supercookies" are cookies designed to be permanently stored on devices. They're often more difficult to detect than regular cookies and can't be deleted in the same way regular cookies can.

Privacy advocates have criticized wireless operators for using this technology because of their stubborn and stealthy nature. Privacy advocates also warn this information could be used by hackers to track users' activities.

Verizon began using the supercookie tracking technology in 2012 to help its advertisers provide more targeted advertising. In late 2014, consumer and privacy advocates began criticizing the practice, which caught the attention of the FCC. A study in January 2015 showed that this tracking information couldn't be erased and could be accessed by third parties, even if users tried to remove their browsing history from their mobile browsers.

Verizon says it's worked over the past year to make changes to its policy to ensure customers are informed of its policies. In March, Verizon updated its privacy policy to inform customers about the supercookies and began offering customers the ability to opt out of this tracking.

"Verizon gives customers choices about how we use their data," said Richard Young, a spokesman for Verizon. "We work hard to provide customers with clear, complete information to help them make decisions about our services."

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