OnStar, Privacy And Consumer Tracking

I was flying to Washington, D.C., last week and noticed a piece in the Wall Street Journal titled "OnStar to Start Tracking, Sharing More Data From Cars." Apparently New York Sen. Charles Schumer noticed it as well as another article over the weekend quoted the Senator as saying "OnStar is attempting one of the most brazen invasions of privacy in recent memory." The article also quoted OnStar's vice president of subscriber services as apologizing for "creating any confusion about our terms and conditions." I don't think confusion is the issue.

All of this was triggered when General Motors' OnStar announced that it would keep the vehicle's OnStar connection live -- even if the vehicle owner is not an OnStar subscriber. A live connection means the vehicle location is being tracked, along with a whole host of sensor data. Consumers can close the connection, but only by contacting OnStar and asking specifically to deactivate the data connection. The Senator's comments seem a bit extreme. Google, Facebook, a myriad of ad networks and others have elevated tracking of consumers to a fine art. OnStar may be operating more in the "real world" as opposed to the "virtual world," but its announcement merely shows it is travelling down a well-worn path. This doesn't mean that what OnStar is doing is a good idea.

My issue with the state of consumer tracking today is that it is being done without the consumer's express and informed consent. Marketers (and now OnStar) tout all the benefits consumers derive from tracking, such as more relevant advertising and the like. These benefits may indeed be valuable to consumers, which is the rub. If they are so valuable, what is the big deal about just asking consumers to opt in? The downside of failing to be straight with consumers is minor dust-ups like the one between the Senator and OnStar, or potentially something more serious in the future.

It is easy to see the logic of OnStar's decision. Everyone seems to be tracking consumers today. Consumers don't seem to be pushing back, so why not? I worry about this logic. I realize that for many companies, there is profit in tracking consumers. But I would argue there is great value in building trust. So far, most companies have not shown enough self-restraint when balancing trust against profits. As much as I would hate for it to come to this, it may fall to the Federal Trade Commission to regulate consumer protections along the lines we see in Europe, where the default is for consumers to opt in. That should be the default. Explain to consumers what you are doing, convey the benefits and ask them to opt in.

Jeremy Anwyl: Vice Chairman of Edmunds.com. Follow @JeremyAnwyl on Twitter.