Netflix Defends Privacy Deal, Says $9 Million Is Going Rate

Like Facebook and Google, Netflix recently settled a class-action privacy lawsuit by agreeing to donate millions of dollars to nonprofits. And, as with Facebook and Google, not everyone is happy about the agreement.

Some Netflix users are so unhappy that they're asking the 9th Circuit Court of Appeals to vacate the deal, arguing that it doesn't benefit the people who were affected by the potential privacy glitch.

The lawsuit centered on allegations that Netflix violated a 1988 video privacy law by holding on to subscribers' records after they had canceled their memberships. That law, which was passed after a newspaper obtained the video rental records of Supreme Court nominee Robert Bork, prohibits movie rental services from disclosing consumers' records without their consent. It also requires services to delete users' personal information as soon as possible.

The Netflix settlement requires the company to stop linking former subscribers' names with their movie-viewing history, and to pay $6.5 million to 20 nonprofits and up to $2.25 million to the lawyers who sued on behalf of consumers. But it doesn't require Netflix to pay anything to the users whose information was retained.

Critics say that's a problem, and have asked the 9th Circuit to undo the deal.

Netflix disagrees, and recently filed papers with the 9th Circuit arguing that the settlement should stand. The company says it doesn't believe it violated the law, but nonetheless agreed to shed users' personal information -- even though doing so “entails significant engineering work.”

The company also argues that the $9 million settlement is appropriate because it's in line with privacy settlements by Facebook and Google. In Facebook's case, the company settled litigation about the infamous Beacon program -- which told users about their friends' ecommerce purchases -- by agreeing to pay $9 million, with $6 million devoted to funding a new privacy nonprofit.

Google paid around the same amount for launching its defunct social network Buzz in a way that compromised people's privacy. Google also recently agreed to pay $8.5 million to settle allegations that it violated users' privacy by “leaking” their names to advertisers via referrer headers.

But Facebook's Beacon settlement, as well as Google's most recent settlement, aren't done deals yet. In the Google matter, the trial judge is still considering whether to approve the deal. In Facebook's case, a trial judge and appellate court okayed the settlement, but a user recently asked the Supreme Court to decide whether the deal should have gone through.

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1 comment about "Netflix Defends Privacy Deal, Says $9 Million Is Going Rate".
  1. Paula Lynn from Who Else Unlimited , November 8, 2013 at 9:11 p.m.
    What they did was illegal. They admitted it. What's to think about except to increase the fines to where they and the next companies DO NOT do it. 9 mil is chump change to them.