Verizon will pay a $1.35 million fine and agreed to a three-year consent decree after the Federal Communications Commission said it found the company's wireless unit violated the privacy of its users.
Verizon Wireless agreed to get consumer consent before sending data about "supercookies" from its more than 100 million users, under a settlement. The largest U.S. mobile company inserted unique tracking codes in its users traffic for advertising purposes.
Supercookies are unique, undeletable identifiers inserted into web traffic to identify customers in order to deliver targeted ads from Verizon and others.
The FCC said on Monday that Verizon Wireless failed to disclose the practice from late 2012 until 2014, violating a 2010 FCC regulation on Internet transparency.
The FCC also said the supercookies overrode consumers privacy practices they had set on web browsers, which led some advocates to call it a "zombie cookie."
Under the agreement, consumers must opt in to allow their information to be shared outside Verizon Wireless, and have the right to "opt out" of sharing information with Verizon.
Until March 2015, Verizon Wireless consumers could not opt out of the "supercookies," but after several U.S. senators raised concerns about the practice, the company agreed to allow an opt-out.
"Consumers care about privacy and should have a say in how their personal information is used, especially when it comes to who knows what they're doing online," said FCC Enforcement Bureau Chief Travis LeBlanc.
Verizon spokesman Richard Young said the company "gives customers choices about how we use their data ... Over the past year, we have made several changes to our advertising programs that have provided consumers with even more options. Today's settlement with the FCC recognizes that."
U.S. Senator Bill Nelson, a Florida Democrat, said the settlement was "a win for consumers that will hopefully make companies think twice before engaging in practices that violate consumer privacy."
The FCC plans to unveil new proposed privacy protections for broadband as soon as later this month.