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The state of Texas has filed a lawsuit against General Motors (NYSE:GM) for allegedly collecting and selling drivers’ data without consent.
What Happened: The lawsuit was announced by Texas Attorney General Ken Paxton on Tuesday. The legal action follows an investigation initiated in June into several car manufacturers for similar allegations.
Paxton revealed that the investigation uncovered “egregious business practices” by General Motors that violated the privacy of Texans and broke the law. The company allegedly used technology installed in most 2015 model year or newer GM vehicles to collect, record, analyze, and transmit detailed driving data. This data was then sold to several companies.
The complaint also alleges that General Motors misled customers when enrolling them in its products, including the OnStar Smart Driver. Customers were allegedly not informed of the company’s actual conduct — the systematic collection and sale of their highly detailed driving data.
"We've been in discussions with the Attorney General's office and are reviewing the complaint. We share the desire to protect consumers' privacy," a General Motors spokesperson said in a statement to The Hill.
Why It Matters: The lawsuit against General Motors comes amid increasing scrutiny over how automakers handle driver data. In July, U.S. Senators Ron Wyden (D-Ore.) and Ed Markey (D-Mass.) urged the Federal Trade Commission to investigate the automotive industry's data-sharing practices.
They highlighted concerns that companies like General Motors, Honda Motor Co (NYSE:HMC), and Hyundai Motor (OTC:HYMTF) were sharing driver data with data brokers, potentially leading to higher insurance premiums for some drivers.
Earlier this year, reports surfaced that internet-connected vehicles, including the Chevrolet Bolt, were tracking driving patterns and sending this data to insurance companies. This practice led to increased insurance costs for some drivers, sparking further debate over privacy concerns.
Additionally, General Motors has been navigating significant challenges in its global operations, particularly in China. The company is reportedly downsizing employees and planning a structural overhaul to address declining sales and intense competition from local brands. Despite these hurdles, General Motors remains committed to maintaining cash stability in its Chinese operations.
Price Action: General Motors’ stock closed at $43.32 on Tuesday, up 0.77% for the day. In after-hours trading, the stock dipped 0.44%. Year to date, GM shares have surged by 20.17%, according to data from Benzinga Pro.
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Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
