The company is changing its policy so that it is no longer possible to identify the video "histories" of customers who haven’t subscribed to Netflix for 12 months or longer. Past and present customers were notified of the change by email on Monday.
Under the deal, Netflix will also have to cough $9m, though none of it will go to members of the class-action suit. Under the agreement, Netflix must donate $6.65m to nonprofit privacy organisations, while the remaining $2.25m will go to the law firm that served as class counsel.
People who do not respond to Netflix’s email will be deemed to have agreed to the change and will surrender the legal right to take further action against Netflix for breach of data privacy under the class action case launched in 2011.
If you wish to fight on, Netflix’s email says you must exclude yourself by 14 November, 2012.
The change in policy is part of a proposed settlement to the class-action brought by former Netflix customers Jeff Milans and Peter Comstock of the US state of Virginia.
Their case alleged Netflix had broken the 1998 US Video Privacy Protection Act, which prevented video rental services sharing data about past and present customers’ viewing habits. It also alleged that netflix had shared customers' data with unnamed "third parties". Netflix has not admitted to any wrongdoing in agreeing to settle.
The case was filed in San Francisco, where the court will hold a hearing on 5 December, 2012 to consider objections and make a decision on whether to approve the settlement.
Netflix lost more than 800,000 customers in one quarter of 2011 thanks to price increases after the introduction of a streaming service and the firm's decision to split streaming and DVD rental into separate businesses.
At the time, streaming was to be called Netflix and DVD rental was to be dubbed Qwikster. But Netflix abandoned the spin-out plan while its chief executive Reed Hastings, a Microsoft board member, apologised for upsetting customers. ®