Netflix Privacy Violation Lawsuit

Alina Mejer

 

http://news.cnet.com/8301-1023_3-57377084-93/netflix-pays-$9-million-to-settle-privacy-violation-lawsuit/

 

In keeping with this week’s discussion about statutes that regulate commercial entities’ use of personal data, this recent article about Netflix highlighted how consumers can use the statutes to try and redress any privacy violations.

 

Netflix settled a class action lawsuit that was filed in January 2011 for $9 million. The case was brought under the Video Privacy Protection Act, a statute that was discussed during Tuesday’s class. Professor Rubinstein noted how the statute was a reaction to prying reporters who tried to get information about Robert Bork’s video rentals during his Supreme Court nomination hearings. The law was passed in 1988 and essentially makes it illegal for video stores to provide information about what their customers rent. The plaintiffs in this lawsuit made the claim that Netflix was in direct violation of this law by keeping records of what they had watched for up to two years after subscribers cancelled their Netflix accounts.

 

Interestingly enough, however, this $9 million payout does little to impact Netflix’s profit margin. Though it decreased their fourth quarter income by fourteen percent, Netflix’s most profitable year was in 2011.  This article highlights how these statutes are used by consumers to try and protect their privacy. However, it is discouraging to see that the incentives for companies like Netflix are not perfectly aligned with the available remedies because it seems like this settlement was more like a slap on the wrist – especially in light of the fact that Netflix admitted no wrongdoing as per the terms of the settlement agreement. It will be interesting to see how future cases are litigated considering the privacy risks that evolving technologies pose to consumers, a broader theme explored in this course.