Netflix axes contest because of class-action lawsuit

The top DVD-by-mail rental service Netflix has pulled the plug on a pending contest after it started to raise concerns that it could expose sensitive information about private customer records.

The contest was going to be a repeat of a similar contest that Netflix ran from 2006 through 2009, but now there is a class-action lawsuit over concerns that the company exposed customer data during that three-year time frame, which violates federal law.

The contest worked like this: Netflix presented users with DVD rental histories of various subscribers, as a way of getting users to help improve the company’s recommendation system. No names were ever attached to these rental lists, but critics say it still was a violation of privacy. Netflix was planning on running the contest again, but then it was hit with this lawsuit.

The class-action suit alleges that there were ways to figure out who each sample rental history actually belonged to, and it also points to a federal law that prohibits rental companies from publicly sharing customer movie preferences.

The previous contest, which was completed and fullfilled, had a prize of $1 million. There was no announcement yet on what the now-canceled contest was going to offer. In official statements, Netflix has dodged addressing the lawsuit directly. In a blog post, the company simply stated that it will continue to work hard to improve its movie-recommendation technology.