OnStar in Hot Water Over Continuous Connection

OnStar, the GM-owned in-car communications, GPS and roadside assistance system, is facing some backlash this week after it came to light that even if car owners canceled the service, the link between them and the company would remain live.

The company's most recent privacy statement (Warning: Link leads to PDF) states "Unless the Data Connection in your Vehicle is deactivated, information about your Vehicle may continue to be collected even if you do not have a Plan." It goes on to say that even if users cancel OnStar service, they must specify that they want the data connection cut as well:

Unless the Data Connection to your Vehicle is deactivated, data about your Vehicle will continue to be collected even if you do not have a Plan. It is important that you convey this to other drivers, occupants, or subsequent owners of your Vehicle. You may deactivate the Data Connection to your Vehicle at any time by contacting an OnStar Advisor.

It seems what we have here is a Netflix-style error where the communication of a new policy fails to fully consider how consumers will respond to the change. In reading that, I find myself asking: What's in it for OnStar to keep that connection live, unless they're planning to sell some sort of information on me? Why do they even charge for the service if providing the connection is no big deal?

Insurance companies should take heed of this lesson as more explore usage-based auto insurance. Privacy concerns are always foremost among consumers, and when a company that is itself linked to usage-based insurance makes this misstep, it could ripple throughout the industry.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio