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Netflix to delete former customers' viewing histories

Former Netflix users no longer have to worry about anyone finding out about that one-time streaming of Yanni: Live at the Acropolis.

As the end result of a class-action privacy lawsuit, the online DVD rental company has agreed to delete former users' video history and queue data within one year of the customer's cancellation of service.

"Today's filing is part of the process of effectuating the settlement that was announced in February", Netflix spokesman Joris Evers said in a statement.

Filed last year in San Francisco federal court, the lawsuit accused Netflix of violating the 1988 Video Privacy Protection Act (VPPA), which prohibits video rental outlets from sharing customers' rental history without permission. The company has more than 23 million US streaming users, in addition to those who receive by-mail DVDs.

Plaintiffs in the case claimed that the company kept comprehensive digital records of every rental and streaming order from all customers long after they abandoned Netflix.

The US District Court of California settled the suit with the company for $9 million (£5.8 million) with no admission of wrongdoing, according to a statement by Netflix spokesman Steve Swasey. While the company said it believes that a members' history is a valuable entity, used in large part to recommend future viewing, it will delete customers' information after a year of non-use.

The change will take effect once the settlement is approved, which could take up to two years, the company said.

Netflix will write a cheque for $6.65 million (£4.3 million) to various privacy organizations, as well as the lawyers' cut of $2.25 million (£1.5 million). Though they avoided a court case, the company saw a 14 per cent decrease in fourth-quarter net income because of the settlement, the Huffington Post reported.

Earlier this year, Netflix made the case for updating the privacy protection law, in order to allow US users to share streaming viewing habits on Facebook. The VPPA limits how much customers can share about their video history, leaving Netflix's Facebook app in the dust.

In 2010, Netflix scrapped its $1 million (£646,000) Netflix Prize contest as part of a lawsuit settlement regarding the use of members' personal information. The Prize was intended to improve the Netflix recommendation engine, but a subsequent lawsuit claimed that those improvements made it easier to identify people through supposedly anonymous information. The case was settled after the FTC intervened.

It's unclear whether, or to what extent, the settlement will spur similar legal action in the UK.