FinTech startup Plaid is at the center of another class-action lawsuit, as it continues to answer questions over its data privacy practices. Last week, a new complaint concerning the firm surfaced online. Filed by four plaintiffs, it alleged that the company had violated the privacy of over 200 million users.
Plaid Conducted “Data Plumbing”
According to the complaints, Plaid reportedly used customer accounts acquired from third parties to serve marketing needs. These companies include the likes of Coinbase and Square. It was reported in the lawsuit that the fintech firm acquired data of over 200 million users.
The firm had essentially gained access to its user’s financial information and used them to serve commercial purposes, per the complaint online. As the complaint explains, these purposes had no relation to the customers’ use of other apps.
“Plaid exploits its ill-gotten information in a variety of ways, including marketing the data to its app customers, analyzing the data to derive insights into consumer behavior, and, most recently, selling its collection of data to Visa as part of a multi-billion dollar acquisition.”
This new class-action joins a previous one which surfaced last month. The first suit alleged that Plaid managed to access the most in-depth information about these users’ accounts, including the precise details of their transactions. The class members from the previous suit had reportedly suffered over $5,000 in annual damages from Plaid’s privacy violations. However, it didn’t specify the amount that the class members sought in compensation.
Privacy Issues are Almost a Rite of Passage in the Tech Space
Plaid has so far denied the first allegation. In a message to industry news source Cointelegraph, a spokesperson for the firm called the claims “baseless” and added that they planned to defend themselves vigorously.
“Plaid does not sell and has never sold consumers’ personal information or data. Consumer data is obtained and used with consumer consent,” the spokesperson asserted.
The company’s privacy debacle is following a long line of tech firms. Industry behemoths like Facebook and Google have all paid hundreds of millions in fines, and even upstarts have come under fire for their loose privacy policies. Earlier this year, the video-conferencing platform Zoom faced significant backlash after a wave of reports concerning the service’s weak privacy settings. “Zoombombings” became more of a norm, with people gaining access to video calls illegally and disrupting meetings.
Soon enough, additional reports accused the company of promoting end-to-end encryption, all the while knowing that its calls weren’t encrypted. However, the company has now made significant adjustments to its service in light of these complaints. As for Plaid, it’s quite clear that the battle is just beginning. Although the complaints haven’t laid out specific fines, the company will be on the hook for some significant settlement if found guilty. For now, however, it continues to vehemently deny the allegations.