The company will have to make personal data unidentifiable after customers end their subscription
Previously, Netflix would keep the history of all rentals for all of its users, even after they left the service, in breach of the US Video Privacy Protection Act and several other laws. Under the new rules, the company still keeps the data, but promises to anonymise it a year after a user’s subscription ends.
As part of the settlement, Netflix will also have to pay out $9 million (£5.7 million), reports lexology.com, mainly to privacy advocacy groups. The company notified its customers about the policy change in an email on Monday.
The lawsuit was filed last year in the US District Court in Northern California, after six former customers had realised that their data was kept by Netflix for several years after they terminated their subscription.
It accused Netflix of breaching the US Video Privacy Protection Act by keeping rental data longer than permitted, and even disclosing it to third parties. Other laws that might have been broken include the California Customer Records Act and the California Unfair Competition Law.
The case was soon granted a class action status, meaning that a few named plaintiffs could bring the suit on behalf of all of the members of a large group, without the necessity of each member filing an individual lawsuit.
Although Netflix didn’t admit any wrongdoing, “taking into account the uncertainty and risks inherent in any litigation”, it agreed to settle the case. As of Monday, the company has changed its policy to make the data unidentifiable 365 days after customers leave the service.
Each of the six “named plaintiffs” who initiated the lawsuit will also receive an “incentive award” of $5,000.
Since it was granted a class-action status, the settlement will represent a victory for tens of millions of Netflix customers in the US and Canada.
According to Ars Technica, back in 2010, the company settled another privacy suit over subscriber information. The plaintiff was a lesbian who was worried that she might be outed if her subscription history was disclosed.
At the time of publishing this article, Netflix hadn’t responded to our request for comment.
The Court will hold a final hearing on 5 December, to consider any objections and approve the settlement.
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