March 16, 2011 5:44pm PT by Eriq Gardner
Netflix Data On Customer Viewing Habits Sparks New Class Action Lawsuit
Netflix is contending with a new class action lawsuit that alleges the streaming service violates customer privacy by retaining viewing and payment records even after a customer cancels his or her service.
Peter Comstock, a Virginia resident, filed the proposed class action last week in U.S. District Court in California on behalf of himself and others. The plaintiffs claim that Netflix keeps comprehensive digital records of every streaming video and video rental ordered by each of its subscribers and that their retention of both payment and video viewing habits of millions of individuals constitutes a violation of both state and federal laws.
The complaint notes that Netflix uses the data as part of a recommendation algorithm that helps its customers find videos they might enjoy.
Such tracking is "hardly surprising," says the lawsuit, but what "subscribers do not realize (is) that Netflix maintains this video-viewing information, along with confidential subscriber payment information...in its databases long after subscribers cancel their Netflix subscription."
The plaintiffs, represented by attorneys at the law firm of Parish & Havens, believe this constitutes a violation of several laws, particularly the federal Video Privacy Protection Act, which makes it a crime to disclose personally identifiable information concerning any consumer as related to their videotape rental or sales habits.
That law was passed in the late 1980s as the result of a backlash when the video rental history of Supreme Court nominee Robert Bork was published during his nomination process. It became the basis of a previous class action lawsuit against Netflix, when a group of plaintiffs claimed the company had illegally shared customer information to derive a better recommendation algorithm. That case never got to judgment. Last March, Netflix settled with the plaintiffs under confidential terms. Similarly, another class action lawsuit against Blockbuster for breaking provisions of the VPPA was also settled last year before establishing the data privacy obligations of a digital video rental service.
The Comstock lawsuit also alleges violations of California's Customer Records Act, California's Unfair Competition Law, unjust enrichment, and breach of fiduciary duty. Plaintiffs demand $2,500 per violation of the VPPA, $3,000 per violation of the Consumer Records Act, and further punitive damages.
Netflix hasn't yet responded to our inquiries.