The settlement comes nearly three years after Google admitted information such as passwords and emails was collected from un-encrypted WiFi networks its cars drive by collecting images for its mapping Street View project, CNN reported Tuesday.
Google has also agreed to destroy the personal data it collected.
"We work hard to get privacy right at Google," the company said in a statement. "But in this case we didn't, which is why we quickly tightened up our systems to address the issue. The project leaders never wanted this data, and didn't use it or even look at it."
Cars with cameras attached to their roofs have been collecting 360-degree images for the Google Maps Street View component since 2007.
Officials in states involved in the settlement were quick to comment on the settlement.
"The importance of this agreement goes beyond financial terms," said Connecticut Attorney General George Jepsen. "Consumers have a reasonable expectation of privacy."
However, some consumer advocates said Google got off too lightly.
"With Google's revenue of $100 million a day, the fine is just a drop in the bucket and not enough to deter bad behavior," American Consumer Institute President Steve Pociask said.
"Consumers are growing tired of seeing Google apologize time and time again, pay a small fine and make vague promises in settlements with one agency or another, only later to engage in the same behavior."