Netflix is a provider of on-demand internet streaming media as well as DVD-by-mail services, with approximately 23.6 million subscribers in the United States and over 26 million subscribers worldwide. It has been reported that Netflix saves the viewing history of its users, along with their personal information in order to offer TV and movie suggestions to its customers. However, Netflix was accused of keeping and sharing that information long after its customers dropped out of the service, despite the Video Privacy Protection Act of 1988, which makes it illegal to share an individual’s video viewing history.
On January 26, 2011, six Plaintiffs brought a putative class action in the United States District Court for the Northern District of California against Netflix alleging, among other things, that Netflix violated the Video Privacy Protection Act. The lawsuit alleges that Netflix kept records of TV and videos watched by its customers for at least two years after the customers canceled their Netflix subscriptions. The Plaintiffs allege that Netflix unlawfully retained and disclosed information about the movies and TV shows that its current and former subscribers viewed.
As part of the settlement, Netflix has agreed to change its data retention policies so it will no longer link customers with their rental histories after one year of canceled service. Netflix has agreed to separate Entertainment Content Viewing Histories (the movies and TV shows that Netflix customers watched) from customer identification information for former subscribers whose accounts have been cancelled for at least 365 days, subject to certain exceptions. As a result, Netflix will no longer be able to view the account history for customers who have not subscribed to the service for at least a year. Netflix recently sent an email to its customers notifying them of this change in policy.
In addition to changing its policy, Netflix will pay $9 million into a settlement fund. During a recent interview, Netflix’s executive director, Marc Rotenberg, stated that most of the settlement fund will be donated to a group of not-for-profit organizations, institutions and programs approved by the Court. The groups that will benefit from the settlement have not been identified. However, the recipients will be nonprofits that educate consumers and regulators on the protection of privacy and personal information. Advocacy groups hoping to share in the award are invited to nominate themselves. The parties will then select nominations for Court approval. Additionally, from the $9 million, up to $2.25 million will go to pay attorneys’ fees, up to $25,000 will cover expenses, and $30,000 will be paid to the six named Plaintiffs.
Source: American Bar Association Journal
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