Telecommunications giant Verizon Communications Inc. (NYSE:VZ) was recently slapped with a large $7.4 million fine from the Federal Communications Commissions. This is over an incident which dates back to 2006 when the corporation used information from two million customers to launch marketing campaigns.

Verizon communications

Verizon’s significant mistake

Verizon Communications Inc. (NYSE:VZ) made a key mistake when the company failed to realize customers could withdraw from campaigns. This hefty fine is also the largest payment Verizon has ever received under investigations specifically involving customer information. Verizon also has to agree to a three-year compliance plan in addition to the fine.

This latest move is actually one of the stricter moves for every corporation which obtained and used customer information for marketing in the past decades. Some of the information Verizon used included purchase histories, credit information, economic information, and demographic information all to help give the company an edge in marketing.

A look at two choices

The law specifically stated telecommunication companies have two options. The first option allows the company to obtain personal information from customers such as destination of numbers called, call length, and number of calls made. The second option, the company can simply inform users of information and give them the option to opt out.

Interestingly enough, Verizon Communications Inc. (NYSE:VZ) did not generate opt-out messages for about 2 million customers back eight years ago. A representative for the company claimed the omission came from a computer glitch. Both wireless an landline users were affected.

Customer privacy is a serious issue that companies need to make a priority. This latest fine is essentially serve as a strong reminder to Verion and other telecommunication companies. FCC’s Acting Chief of Enforcement Bureau Travis LeBlanc explained the importance of informing customers of their privacy options. He added that it was unethical for phone companies to use personal information for marketing campaigns without the choice of opting out.

via: CNET