Car Tracking: What Role do Automakers Play to Uphold Section 5 of the Federal Trade Commission Act?

It is no secret that our phones and its applications that we utilize on a daily basis have been tracking and even storing personal data, but are you aware that your car is tracking you too? According to the MIT Technology Review, 60% of Americans believe that they are being tracked by companies and the government. Additionally, 79% of Americans do not believe that companies will come clean if their data is misused. However, Americans’ concerns may need to extend beyond their phone and into the cars they drive. Recent developments in advanced technology have revolutionized the automobile industry with the implementation of internet connectivity, expediting the ease and accessibility of vehicle maintenance, navigation, and apps in modern cars. However, unbeknownst to consumers, their engagement with car apps and services may result in the sale of their car data to third parties that will be used to determine car-related rates including insurance. Automakers’ data privacy practices must be regulated in compliance with Section 5 of the Federal Trade Commission Act. Traditional user agreement terms and privacy statements are no longer sufficient in informing their consumers, and a more explicit and transparent disclosure of user data is needed for how driving is measured.

The current discourse surrounding automaker data privacy practices stems from recent class action lawsuits, state agency probes, and policymaker calls for investigation. Drivers Kenn Dahl and Romeo Chicco  were both subjected to higher insurance rates after their automakers shared their driving data with data brokers including LexisNexis and Veserik. These data brokers had been tracking driving data including distance driven, speeding, sharp accelerations, and hard braking with unclear selection criteria for how these incidents are measured. This driving data is collected through car apps designed to ensure safe driving, like General Motors’ OnStar Smart Driver feature or Hyundai’s “Driving Score” feature. However, drivers are often unaware that their enrollment in driving programs exposes their collected information to data brokers who sell their information to insurance companies.

The lack of data usage transparency has caused considerable controversy, resulting in calls for state and federal regulation. In California, the Privacy Protection Agency is currently investigating the privacy practices of automakers in connection with the collection of consumer’s vehicle data. Additionally, Senator Edward J. Markey, a member of the Senate Commerce, Science, and Transportation Committee, has called for the Federal Trade Commission to investigate the privacy practices of automakers. Senator Markey cites the lack of oversight in the collection of data — not just for drivers, but for their passengers and people outside or near the vehicle. These investigations call into question whether  automakers and their relationships with third-party companies are violations of Section 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.”  In light of recent scrutiny, automakers have reiterated that engagement in these driving programs is completely voluntary, and the potential that consumers' data may be shared with third parties is outlined in user terms and privacy statements. However, it is important to recognize that automakers' partnerships with data brokers, like the Lexis/Nexis Telematics Exchange program and Versik’s  “Internet of Things and Telematics Solutions”, are not highlighted to consumers. Furthermore, embedding the potential outcomes of these programs in lengthy, expansive, and auto-related legalese text is unclear for consumers. 

Ultimately, the concern of data collection within the automotive industry stems from whether these companies are exploiting consumers for commercial profit, and if automakers have done due diligence to ensure consumers are properly informed about the use of their data. All automakers need to be forthcoming and explicit about the use of car apps to determine car-related rates, alongside determinants separate from the app itself. These concerns are at the forefront of user politics — especially for insurance rates, which are mandated in almost every state. As advanced technology expands into the automotive and its adjacent industries, regulation is necessary to ensure compliance with Section 5 of the Federal Trade Commission Act and protect consumers.

Dre Boyd-Weatherly is a sophomore at Brown University concentrating in International and Public Affairs. She is a staff writer for the Brown Undergraduate Law Review and can be contacted at dre_boyd-weatherly@brown.edu.

Maia Eng (‘26) is a sophomore at Brown University concentrating in International and Public Affairs. She is an editor for the Brown Undergraduate Law Review and can be contacted at maia_lourdes_eng@brown.edu.