During a recent CES keynote address, comments by Ford executive vice president Jim Farley sparked a controversy over privacy and the connected car that quickly turned into a (timely) conflagration.

"We know everyone who breaks the law, we know when you're doing it," Farley said. "We have GPS in your car, so we know what you're doing." He then added, that "we don't supply that data to anyone," or sell the information to third parties.

Farley apologized the following day and said in an interview with CNBC that "we do not monitor and aggregate data on how people drive. I've given people the wrong impression. I regret that."

Ford also denounced Farley's comments. "That comment was a mistake and is wrong," Ford spokesman Wesley Sherwood said in response to an email. "We do not track our customers. No data is transmitted from the vehicle without the customer's express consent first."

But the damage had been done and, as with most cases of trading data for services in an increasingly connected world, most drivers don't always realize that they are giving consent. Lawmakers took notice, with Minnesota Senator Al Franken sending a letter to Ford CEO Alan Mullaly asking for clarification on the company's data security.

Farley's comments also came on the heels of a Government Accountability Office report from last month that found that automakers store location information on drivers via in-dash navigation system data. And a week before, AAA advised companies to safeguard consumers' data used in conjunction with GPS navigation systems.

Farley comments were wrong—but as much in a factual context as a corporate faux pas. And they've also opened up a new front in the battle over data privacy that was bound to bubble to the surface at some point.

I heard Farley make similar comments at a private press dinner at CES, but in the context of providing infotainment features such as finding a destination through cloud-connected navigation and summoning roadside assistance. And it shouldn't come as a surprise to anyone using such services—whether it's Ford Sync or Facebook—that they're trading a certain amount of privacy for connected features.

Ford's navigation provider, Telenav, for example, uses data such as latitude, longitude, route, and destination information to provide turn-by-turn directions, traffic and restaurant information, or other services, noted Niall Berkey, Telenav's executive director of business development. "We anonymize and aggregate personal information whenever it is feasible to do so," he said.