Netflix has just settled a class-action lawsuit that was brought in U.S. District Court in California.  The $9 million settlement will be finalized in a December 5th hearing and covers current and former Netflix subscribers nationwide.  I want you to be aware of the settlement in case you’d be covered by the settlement and might receive some official notice from Netflix and/or the U.S. District Court in California.

The plaintiffs alleged that Netflix had violated consumer privacy laws by keeping records of their subscribers’ DVD and Internet videos rentals for at least 2 years after subscribers had canceled their service — and for keeping subscribers’ credit card information.  The plaintiffs alleged that Netflix then used this personal and financial information for marketing and advertising purposes without first getting subscribers’ consent.  All of these allegations would violate Netflix’s legal obligation (under the “Video Privacy Protection Act of 1988”) to purge “personally identifiable information” of its subscribers within 1 year after it no longer needed to keep it for the purposes for which the information was originally collected.

The proposed settlement has Netflix addressing the alleged violations by:

  • agreeing to “decouple” subscribers’ rental histories from other personal identification data once a year after subscribers cancel their service; and
  • using the $9 million settlement to educate consumers and regulators on privacy protection.

The details about that last point will be known after the proposed settlement is finalized at the December 5th hearing.  For more details, Jonathan Stempel has a good article; go to http://www.huffingtonpost.com and hit the “TECH” site (“Netflix Class-Action Suit Over Privacy Violations Reaches Settlement, Wins Judge’s Approval”).

This settlement serves as a useful reminder about a more important general point.  Be alert if you’ve cancelled any kind of service but are still getting marketing and/or ads that seem to be related to that service. Contact the service immediately to find out if the company is keeping hold of, and using, your personal and/or financial information without your express permission.