Remember the opening sequence of "The Sopranos"? Mob boss Tony
Soprano drives out of the Lincoln Tunnel, stops at a tollbooth and
grabs a ticket. Why didn't he just use E-ZPass and keep on
The answer: Telematics, the high-tech marriage of
telecommunications and computers. An E-ZPass transponder on the
windshield of Soprano's SUV would send the time and location to a
billing center, but it could also inform the FBI of his
A mob boss should be paranoid about telematics, but what about
the rest of us? The NSA is logging who we call, computer punks are
accessing our Twitter accounts, and hackers are opening our
car-door locks. But do we know who's watching us when we drive?
Each time you are in your car -- and we drive an average of 37
miles per day -- you enter into what a Rutgers University study
calls a "sensor-rich" environment. And the number of devices that
watch when, where and how you drive is multiplying.
Devices like E-ZPass are "dynamic." They record and transmit
information from the car to a hovering satellite and then to a
databank -- often on a second-by-second basis -- allowing the
vendor to obtain information. A global positioning system (GPS),
such as OnStar, is another, as is LoJack, which reports the
position of a stolen vehicle to police.
Other devices provide "static" information, such as license
plate and Vehicle Identification Numbers (VINs). They don't
transmit data, but meter maids or retailers scan this information
and send it. In Los Angeles, license plate readers on both the
front and back of police cars can take pictures of
license plate and run it through a database to check for criminal
Insurance companies say that the more you drive, the more likely
you are to have an accident. Many state insurance regulators agree
that this is a legitimate way to rate drivers.
The black box
At the heart of most car monitoring systems is the so-called
"black box," which is installed in every newer car whether the
driver wants it or not and is almost impossible to remove.
Carmakers prefer the term "diagnostic port," because warning lights
tell you about the operation of your car. But it also monitors how
a driver steers, brakes, speeds and even if he or she wears a seat
belt. By inference, it can even tell who is at the wheel, since
driving styles are as individual as handwriting.
The black box is static; the information stays in the car until
one of two things happens:
- A computer is plugged in to read it when a car is
- Or a device is installed that reads it automatically and
sends the information to a third party, such as a monitoring
service or an insurance company.
Many car owners welcome these devices. They help drivers get to
their destinations, prevent breakdowns and offer protection in the
event of an accident or vehicle theft.
The Tesla files
New York Times
reporter John Broder found out how much a car knows about you when
he test drove the new electric Tesla Model S and claimed it
stranded him on the road.
Not so, said Tesla Motors chairman Elon Musk, who downloaded the
Tesla's onboard computer data, which showed the car's actual logs
and speeds -- minute by minute -- to prove that Broder had
deliberately mishandled the Tesla and lied about the breakdown.
Good and bad drivers
Car insurance companies like Progressive and State Farm view
telematics -- and the black box in particular -- as a powerful tool
to differentiate good and bad drivers and insure only the former.
Critics point out that Progressive retains this information rather
than allowing the driver to use it to negotiate his or her own
discount, perhaps even with another insurer.
State Farm advertises that its In-Drive device offers tow truck
assistance and help in finding your car, whether it's been stolen
or out with your teenager who missed curfew.
But to get the perks you have to trade your personal driving
But a telematics device also lets
companies track where you drive and could penalize those who drive
in so-called "bad neighborhoods," effectively "redlining" those who
commute to major cities. State Farm hopes to
its system for determining insurance rates based on where a vehicle
The most tech-savvy state, California, limits the use of
telematics to tracking actual mileage, excluding when or how the
car is driven.
Insurers are well aware of the value of telematics, and most of
the big ones are participating in a September conference in Chicago
at which privacy will be a major topic of discussion.
"It's a huge debate," says Justin Parker, project director of
London-based Telematics Update, which is sponsoring the conference.
"As technologies advance, new challenges emerge in protecting
consumers' data privacy."
Know it all
Supposedly the black box in your car is under your control, but
the fact that it exists causes information-hungry insurers to want
what's contained inside. The same is true for all other GPS
transmitting devices in your vehicle.
Any information can easily be accessed by law enforcement.
Police reports often show up on CARFAX. Videotapes of court
hearings using this information are readily accessible. In other
words, while the data theoretically is yours, it goes public if
you're in an accident, if law enforcement is involved, or if it is
wanted by a family member.
This means that your car, or at least its location at a
particular time, could become evidence in a divorce. Some insurance
policies require car owners to allow the insurer to plug into the
black box, according to Scott Palmer, CEO of Injury Sciences in San
Antonio. And if your car is totaled in an accident, then the
insurer who purchases it probably has access to the black box.
If you drive a company car, courts have ruled that you generally
have no right to privacy. These cars and trucks contain even more
sophisticated systems that tell the owner how long the vehicle has
been on the road and if it is making unscheduled stops. The same
may be true of leased cars, so read your contract carefully.
Europe has even more sophisticated tell-all telematics,
including some which beam the data back to the insurance company
via smart phone apps.
Eventually insurance companies will accumulate huge amounts of
"big data" that they can use in predictive models which will --
like credit scoring -- enable them to cherry-pick certain classes
of drivers and raise rates for others.
A Verisk Analytics' GeoMetric program is already collecting this
data for insurers. So your information is likely to be in someone's
database for years if not forever and, while the insurer may
promise to encrypt it or even "scrub" it of personal information,
this probably won't deter hackers.
In defense of telematics
Telematics can sometimes work in favor of the driver. Michael
Beard, a 28-year-old nurse's aide, was accused of murdering his
7-month-old daughter. But the timeline from Progressive's Snapshot
telematics device showed that he arrived at her home and only
turned off his car for three minutes before turning it back on to
rush his daughter to the hospital -- not enough time to commit the
crime. Beard was acquitted.