General Motors is set to face a five-year prohibition on sharing any data collected from its drivers with consumer reporting agencies. This decision comes as part of a settlement with government authorities addressing allegations that the company disclosed such information without obtaining proper consent from consumers.

Under the proposed order released by the Federal Trade Commission (FTC), both GM and its subsidiary OnStar, which provides roadside assistance services, will also be restricted from sharing drivers’ accurate geolocation data and other pertinent information. They will need to enhance transparency regarding data usage associated with how consumers operate their vehicles, as part of the settlement.

The FTC expressed concerns that GM employed a deceptive enrollment strategy to entice consumers into subscribing for OnStar services and its Smart Driver feature, marketed as an aid for evaluating driving habits. Moreover, the agency contends that GM failed to adequately inform users about the collection of their exact location and driving activities, such as instances of speeding, which were subsequently sold to third-party entities.

According to the FTC, GM sold this data, which detailed actions like speeding and late-night driving, to consumer reporting agencies. These agencies compiled the data into credit reports, ultimately providing it to insurance companies for rate determinations.

FTC Chair Lina Khan commented, “GM monitored and sold individuals’ exact geolocation and driving behavior information, potentially as frequently as every three seconds.” She emphasized that this action highlights the FTC’s role in safeguarding the privacy of Americans and preventing unchecked surveillance practices.

In a statement on its website, GM confirmed its acceptance of the settlement agreement and revealed that the Smart Driver feature has been phased out across all its vehicles, alongside the termination of customer enrollments. Additionally, GM noted the discontinuation of its third-party telematics collaborations with data brokers, including LexisNexis and Verisk Analytics.

The FTC’s investigation was prompted by a request from two U.S. senators last July, who urged the agency to examine claims surrounding the data-sharing practices of GM and other automotive companies in relation to drivers’ data with data brokers.