General Motors has just agreed to pay $220 million to settle allegations that it secretly collected information about its customers’ driving habits and sold that information to data brokers, who then provided it to insurance companies.
Here’s how it worked: You buy a car from General Motors, trusting the company with your safety and your transportation. Unknown to you, your car records how fast you drive, how hard you brake, when you travel, and where you go. And it’s done with OnStar, the communication system often requiring the owner to pay for the service.
GM collected this information from millions of drivers between 2016 and 2024 who were told this feature could help improve their driving. They were never told was that their information was sold for insurance-related purposes. GM’s app incorrectly told more than 370,000 drivers they weren’t enrolled when they actually were, often the result of dealership salespeople enrolling customers without their consent.
California investigators reported that GM earned approximately $20 million nationwide selling driver data to LexisNexis and Verisk. Just $20 million to rat out their own customers! What a spectacular failure of corporate judgment!
Many American corporations seem to have decided that their most important customers are their shareholders, not their real customers and not the people who actually purchase their products.
Today’s technology has made all of this easier than ever. Your automobile can monitor your driving, your television can track what you watch, your phone knows where you go, and your airline knows your travel patterns, spending habits, and how much inconvenience you’re willing to tolerate.
Imagine an airline selling information about customers who frequently book last-minute flights to businesses that could then charge those travelers higher prices. Or a hotel chain sharing information about guests’ future travel plans, selling to companies in the area.
Fortunately, not every company operates this way. Consider Costco, the company has built a hugely successful business around a simple concept: offer excellent products at low prices, treat employees well, and give customers a reason to renew their memberships year after year. Its unusually generous return policy may occasionally be abused, but Costco understands that earning long-term trust is key to their success.
I recently shopped at Costco and mistakingly left some items in my shopping cart when I was loading my car. When I arived home I noticed the items were missing. I wondered if a cashier failed to add the items to the shopping cart or if it was my mistake. When I went back to the store I learned that the items were found and logged into their system, and they gave me replacements. If it hadn’t been found they said they could check their video records at the exit at the exact time I left the store. Another hidden benefit to help their customers.
Another company that puts it customers first is Patagonia, the outdoor clothing company that encourages its customers to repair their products rather than replacing them. Its Worn Wear program helps keep clothing in use longer. That might seem counterintuitive for a company that makes money selling clothing, but it reinforces the company’s identity and gives customers another reason to trust it.
A third example is Chewy, the online pet supply retailer. It’s known for customer-service policies such as sending flowers or sympathy cards when a customer lose s their pet.
I’ve spent much of my career developing products and working with companies of all sizes. One lesson has remained constant: building customer trust takes years, while destroying it can take only one bad decision.
What I have difficulty understanding about GM’s conduct is that it was totally unnecessary. The company already had a valuable relationship with its customers. It had sold them expensive automobiles, offered connected services, and earned access to highly personal information. Instead of building on that relationship, it profited on it. All for just $20 million on top of their revenue of $185 billion. $20 million is 0.0108% of $185 billion — approximately one-hundredth of one percent. If this is the way GM treats their customers, what does it say when it comes to other transactions, such as warrany repairs, and recalls?