Netflix Settles Privacy Class Action Claims For $9 Million

Netflix is paying $9 million to settle a class action lawsuit that alleged the company violated federal law by retaining information about former customers' viewing habits and rental history. The settlement includes no admission of wrongdoing, and the company continues to push for changes in legislation that would allow it to make more uses of customer data.

The lawsuit was filed last March on behalf of individuals who say that Netflix maintained video-viewing information in databases long after they had canceled the service. The plaintiffs are said to have discovered this when they went to re-subscribe to the Netflix service. The complaint asserted this to be a violation of the Video Privacy Protection Act, which requires the destruction of rental records within a year of an account termination.

The law passed in 1988 in the wake of the hearings over Robert Bork's nomination to the U.S. Supreme Court. Back then, there was some outrage when the potential justice's VHS rental history was published.

But for the past year, Netflix has been lobbying for changes to VPPA so that it might allow its consumers to do things like share their viewing habits on social media sites like Facebook.

The House has approved a bill to do so, but the proposed legislation has encountered resistance in the Senate after it heard from some critics who say the VPPA is one of the few strong consumer privacy protections out there. There's also concern that eliminating the VPPA would allow sites like Netflix to share personal information with advertisers.

Netflix revealed its settlement in a SEC filing Monday, and during an earnings call, the company emphasized its continuing fight to "modernize and simplify" the VPPA.

A judge still needs to bless the settlement.


Twitter: @eriqgardner