Texas Sues GM for Selling Owner Data to Insurance Companies

General Motors is in the crosshairs of Texas Attorney-General Ken Paxton, accused of “egregious business practices that violated Texans’ privacy and broke the law” by “misleading” owners into providing personal data then sold to auto insurers to help them set individual rates. The lawsuit could result in fines climbing into the hundreds of millions, even billions, of dollars.

General Motors is facing a lawsuit filed by the Texas attorney-general after it was revealed that the automaker collected personal information about owners – and how they drove. That data then was sold to various companies, including auto insurers who used that “Driving Score” to help set rates.

The lawsuit alleges that data was collected and sold without the knowledge and approval of owners.

As many as 16 million motorists could be impacted by the data breach, the new lawsuit claiming the practice was initiated in 2015.

The allegations

In the lawsuit filed Tuesday, Texas Attorney-General Ken Paxton alleged GM used a “confusing and highly misleading” process to gather data on motorists owning its various products. Among other things, the system could compile a “Driving Score” based on a motorist’s behavior – such as recording jackrabbit launches and hard braking. Sharp turns were monitored and the system even recorded when a vehicle was driven, apparently dunning drivers who went out at late hours. That data was transferred back to the automaker using the OnStar telematics service.

In turn, GM reportedly earned “millions of dollars” in fees and ongoing royalties, according to a report by the New York Times, selling that information to various companies. That included insurance companies and the LexisNexis database that itself sold the information to other companies.

GM buried mention of the “Smart Driver” program in the paperwork motorists used to complete a vehicle purchase, critics contend, where it was easy to ignore or misunderstand what the program entailed.

“Despite lengthy and convoluted disclosures, General Motors never informed its customers of its actual conduct—the systematic collection and sale of their highly detailed driving data,” Paxton’s office said in a statement announcing the lawsuit.

GM faces massive penalties

Under Texas law, GM could be in for some serious financial pain. Essentially, the automaker could be on the hook for $10,000 for every one of its vehicles sold in the state since 2015. And there’s an additional penalty of $250,000 covering motorists over the age of 65.

The attorney-general’s office wants to put the case in front of a jury where it is likely betting motorists will personally relate to the idea of having data surreptitiously collected and then used in ways that could hurt them financially.

Meta, the owner of Facebook, recently settled a case involving illegal collection of user data and agreed to a $1.4 billion payout.

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How it unraveled

The operation was uncovered last spring when a Times reporter received a personal report from LexisNexis that showed the number of trips she and her husband had taken in a Chevrolet Bolt EV, the distance and times they drove, as well as information on “how often we hard-braked or accelerated rapidly.”

“I was furious,” wrote reporter Kashmir Hill, adding that her auto insurance premiums had jumped 50% in just a two-year period.

Since it was first uncovered, GM has announced that it halted the collection and sale of motorist data. But it already is facing a number of other lawsuits by motorists affected by the Smart Driver program, including some that could be turned into class actions.

Responding to the Texas lawsuit, GM issued a statement saying, “We’ve been in discussions with the Attorney General’s office and are reviewing the complaint. We share the desire to protect consumers’ privacy.”