Recently, my automobile insurance company gauged my interest in saving up to 20% on insurance premiums. The catch? For three months, I would be required to install a plug-in monitor that collected extensive metadata—average speeds and distances, routes routinely traveled, seat belt usage and other types of data. But to what end? Was the purpose of the monitor to learn more about my driving practices and to encourage better driving habits? To share my data with advertisers wishing to serve up a buy-one, get-one free coupon for paper towels from my favorite grocery store (just as I pass by it) on my touchscreen dashboard? Or to build a “risk profile” that could be sold to parties (AirBnB, banks, other insurance companies) who may have a vested interest in learning more about my propensity for making good decisions? The answer could be, “all of the above.”
Wireless technology integrated into vehicles is nothing new—indeed, diagnostic systems, cellular connections and in-dash navigation have been the norm for years. However, the breadth of data collection and manner in which data is monetized are evolving quickly. Telematics actually are very akin to a social media platform in terms of the sheer volumes of data collected and the purposes for which data can (and could) be used. To be sure, many use cases stand to benefit drivers—predicting oil changes and locating the nearest gas stations–for example. Future functionality may even detect texting while driving or sleeping drivers.
Opportunities abound, and at least one company’s early success is proof of the sheer potential of telematics data mining. In the past three years, Otonomo has carved out a niche for itself by brokering sales of mined telematic data to parties such as insurance companies and general retail businesses. Otonomo’s technology efficiently packages telematics data into a user-friendly, anonymized platform that takes into account worldwide regulations governing telematics.
Not surprisingly, several automobile manufacturers predict the sale of automobile analytics as a key profit center in coming years. What is surprising, however, are the lack of legal “rules of the road” that exist today in the United States. While laws do clarify that an automobile’s event data recorders are owned by the automobile owner (and provide that these “black boxes” may be obtained only by court order), other laws governing telematics are few and far between. A driver’s consent often occurs upon registration of embedded GPS platforms or other navigation tools, but according to Government Accounting Office research, these types of notices often are lacking in terms of explaining how data is used and whether it is shared. The Federal Trade Commission maintains jurisdiction over consumer data and related privacy issues, but there are not yet rules specific to telematic data collected by the automobile industry.
Much like the credit card industries’ promulgation of Payment Card Industr Data Security Standard (PCI DSS) rules, the automotive industry, in 2014, responded with its own Privacy Principles for Vehicle Technologies and Services, which include the following:
- Transparency: a commitment to provide both owners and registered users of vehicles with access to “clear, meaningful notices” as to what data is collected, used and shared.
- Choice: a commitment to provide owners and registered users with certain choices “regarding the collection, use and sharing” of information.
- Respect for Context: a commitment to use and share information in a manner consistent with the context in which information was collected.
- Data Minimization, De-identification, and Retention: a commitment to collect information only as needed for legitimate business purposes, and to retain it no longer than needed for such legitimate business purposes.
- Data Security: a commitment to implement reasonable measures to protect information against loss and unauthorized access or use.
- Integrity and Access: a commitment to implement measures to maintain the accuracy of information, along with a means for owners and registered users to correct information.
- Accountability: a commitment to take reasonable steps to ensure that any parties receiving the information adhere to the principles.
To date, twenty automakers have signed on to the principles, including Honda, Toyota, Nissan, Subaru and Hyundai.
Congress has also responded to concerns over privacy and security in automobiles. In early 2017, Representatives Joe Wilson (R-SC, 2nd District) and Ted Lieu (D-CA, 33rd District) introduced the SPY Car Study Act. The Act does not introduce any new laws or regulations, but does require the National Highway Traffic Safety Administration (NHTSA) to investigate technological threats to automobiles. More specifically, Congress tasked the NHTSA with identifying:
- Measures necessary to separate critical software systems that affect a driver’s control of a vehicle from other technology systems;
- Measures necessary to detect and prevent codes associated with malicious behaviors;
- Techniques necessary to detect and prevent, discourage or mitigate intrusions into vehicle software systems and other cybersecurity risks in automobiles;
- Best practices to secure driver data collected by electronic systems; and
- A timeline for implementation of technology to reflect such best practices.
Otonomo has indicated that the current market for automobile telematics data focuses on user experience and convenience, but, in reality, no future use case is off the table. And as with many technologies and, in particular, IoT platforms, drivers must weigh the benefits and dangers of use. The calculus would look something like this:
- Benefits (current and future):
- Traffic and navigation services save drivers time and reduce risk of further traffic accidents;
- Automobile diagnostics can not only remind drivers of to-do’s such as oil changes, but also alert drivers to issues such as dangerous behaviors (texting or sleeping while driving, blood alcohol level); and
- Automobile insurance discounts may be a “reward” for drivers supplying metadata.
- Customer “lock-in”—could data as to driving habits (miles driven, speeds, use of turn signals) keep a customer from changing insurance carriers, if prospective carriers refuse coverage based on a driver’s metrics?
- Will lenders factor risky driving behaviors into decisions as to whether credit or loans are extended?
- Will current insurers raise premiums based on activities tracked via collection of metadata?
Indeed, the answer to this calculus may vary across geographies and cultures. In the United States, there is not an across-the-board approach to privacy and data protection; rather, protections are extended across particular industries (ex: HIPAA for healthcare data). U.S. citizens have proven more likely to provide the types of information contemplated if they receive some benefit from such sharing. The European Union, on the other hand, has adopted a stringent, uniform approach to data protection, which is wide-ranging and extends across all industries. It follows that EU citizens may be more sensitive than other geographies to sharing information. It is likely that automobile manufacturers will need to take such variations into account when implementing telematics systems. Regardless of geography, drivers should not only look to the manner in which data is being used today, but also contemplate tomorrow, as the expansion of use case is likely a “not if, but when” scenario. For this reason, the answer to why a person drives more cautiously may be the same as to why his or her grocery bill mysteriously increased last month: “My car made me do it!”