Close-Up: Netflix Hit With Privacy Suit

Netflix has been hit with a potential class-action lawsuit for allegedly breaking a federal law aimed at protecting the privacy of people who rent movies.

In papers filed with the U.S. District Court for the Northern District of California, Virginia resident Peter Comstock argues that Netflix runs afoul of the Video Privacy Protection Act by retaining data about users' movie rental history and recommendations. Netflix "purposefully retains confidential information regarding both payment and video viewing habits for millions of individuals -- even after their subscriptions are canceled," Comstock alleges. Comstock seeks to represent a class of all Netflix users who canceled their accounts more than one year ago. The federal video privacy law, which dates to 1988, specifically prohibits "videotape service providers" from releasing consumers' records without their permission. Congress passed the measure after a newspaper obtained and printed the video rental records of Judge Robert Bork in conjunction with his ill-fated nomination to the U.S. Supreme Court. The law also requires providers to destroy consumers' video rental records within a year of the time the provider no longer needs the data. One purpose of that provision was to minimize the privacy risk to consumers, says Marc Rotenberg, director of the Electronic Privacy Information Center and former counsel to Sen. Patrick Leahy, who drafted the Video Privacy Protection Act. But the law's wording leaves some room for doubt about whether it applies online.