(Don Ryan, Associated Press)
(Don Ryan / Associated Press)

Verizon has agreed to pay a $7.4 million penalty after the company failed to tell 2 million customers they could opt out of having their personal information used for marketing purposes, according to federal regulators.

The fine is the largest ever levied by the Federal Communications Commission on a phone company over a privacy misstep. The FCC is also requiring that Verizon notify customers about their ability to opt out of marketing on every single bill they receive.

"It is plainly unacceptable for any phone company to use its customers’ personal information for thousands of marketing campaigns without even giving them the choice to opt out,” said Travis LeBlanc, the acting chief of the FCC's enforcement bureau.

For six years, according to the FCC, Verizon failed to notice that it was sending out first-time bills to new customers that didn't include opt-out notices. It wasn't until September 2012 that the company noticed anything was amiss — and then it took another four months for Verizon to disclose the problem to the FCC. Federal regulations call on companies to report any billing problems within five days of discovery.

Verizon said the problem has since been fixed.

"The issue here was that a notice required by FCC rules inadvertently was not provided to certain of Verizon's wireline customers before they received marketing materials from Verizon for other Verizon services that might be of interest to them," the company said in a statement. "It did not involve a data breach or an unauthorized disclosure of customer information to third parties."

A company spokesman added that the problem arose initially "largely due to an inadvertent IT glitch" that prevented customers from automatically receiving the opt-out notice.

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