California Rakes in $25 Million from Comcast

On September 17, 2015, a California Judge approved a final stipulated judgment between media giant Comcast and the California Public Utilities Commission.  In Paragraph 17 of the Complaint filed the same day, Comcast was not exactly accused of heinous conduct:  “for varying periods of time between July 2010 to December 2012, and for many customers the entire period, approximately 75,000 Comcast residential subscribers in California who had paid Comcast the monthly fee for a non-published or non-listed phone number nevertheless had their subscriber listing information published on Ecolisting, and (in some cases) in phone books, and/or made available by a directory assistance provider.”

In other words, Comcast customers who paid to avoid potentially being listed on sites such a were inadvertently deprived of that purchased service.  Specifically, because “the ‘privacy flag’ was not attached to the listings of approximately 75 ,000 non-published/non-listed subscribers, Neustar provided those listings to Comcast’s vendor, Microsoft FAST, who then published them for Comcast on the Ecolisting website.”  Complaint at ¶ 15.

No financial data was exposed.  No transaction or business data was exposed.  No medical data was exposed.  No emails or passwords were compromised.  Indeed, the only information exposed was the very same information that could be obtained by anyone doing a few sophisticated Google searches – names, addresses, and phone numbers.   For most people, such information exists online independently of any Comcast action or inaction.   In other words, whether or not Comcast properly withheld such information would not likely prevent someone from finding it online.

As part of the settlement, Comcast must pay $25 million in penalties and investigative costs to the California Department of Justice and the California Public Utilities Commission.   The 75,000 customers who were “compromised” ended up with refunds and $100 more in restitution added to their Comcast bills.

And, as part of the stipulated judgment, Comcast also agreed to a permanent injunction that requires the company to strengthen the restrictions it places on its vendors’ use of personal information about customers.  The injunction also requires Comcast to provide a new disclosure form to all customers that explains the ways in which it uses unlisted phone numbers and other personal information.  Such restrictions and added duties have little to do with the actual transgression in question — they represent added gimmes obtained by the California AG’s office given the leverage it had over Comcast.

This case is yet another wake-up call to companies maintaining or processing large amounts of customer data.  Even though the Comcast settlement is somewhat unique given the nature of the information as well as the “unlisting service” provided, other companies also safeguard what may otherwise be publicly available information.  When there are assurances made that such information will be safeguarded, does that automatically elevate the value of the information?

The larger question is how can a transgression with no ostensible harm mushroom into a $25 million payment to a governmental agency?  Until a General Counsel can answer that question with definite certainty, the only course of action is to treat all customer data equally and ensure the requisite reasonable precautions undertaken to safeguard such information matches or exceeds what is considered state-of-the-art for that company’s industry sector.