Verizon has agreed to pay $7.4 million (£4.5 million) in order to settle an investigation into its consumer privacy protections by the Federal Communications Commission (FCC).
The FCC discovered that for several years during the mid-2000s, the firm did not inform customers about the option to opt-out from having their information used for marketing campaigns.
This information is usually included in the first bill or a welcome letter from Verizon, but an estimated two million customers did not receive the notice, breaching the Communications Act.
Travis LeBlanc, acting chief of the FCC's Enforcement Bureau, said that privacy choices are becoming more important in today's increasingly connected world.
"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," he added.
The investigation found that the lapse in opt-out notices ran between 2006 and 2012. Verizon then took several months to inform the FCC of the lapse, despite the fact that problems should be reported within five days.
Verizon has now agreed to include opt-out notices in every bill for the next three years as part of the settlement. The company has also agreed to set up a monitoring system to ensure notices are being sent out.
The firm was keen to stress that the issue did not involve a data breach of user information, but announced that it is complying with the FCC investigation.
"Verizon takes seriously its obligation to comply with all FCC rules, and once we discovered the issue with the notices we informed the FCC, fixed the problem, and implemented a number of measures to ensure it does not recur," the company said in a statement.
The $7.4 million penalty becomes the largest sum in FCC history for a settlement relating solely to the personal information of telephone customers.