On August 5, 2021, a proposed class action lawsuit settlement was reached as part of the closely followed data protection lawsuit against the fintech service company Plaid Inc. (âPlaidâ). The settlement provides for a $ 58 million settlement fund and injunction that would make changes to Plaid’s notification methods and collection of consumer data, including provisions requiring the deletion of certain banking transaction data. (In re Plaid Inc. Privacy Litig., No. 20-3056 (ND Cal.Memorandum of Points for Proposed Settlement, August 5, 2021)). The settlement is still subject to judicial approval.
Here is a brief overview of the main terms of the proposed settlement:
- Money relief: 58 million US dollars to the defined billing class of consumers who, among other things, had a financial account, to which the plaid was accessed with the user’s login data and was connected to a mobile or web-based fintech application.
- Deletion of data: Plaid will delete data obtained from Plaid as part of its Transactions product – which may include information about financial account activity such as the amount, time and place of deposits, withdrawals, transfers, or purchases – for users that Plaid can reasonably determine does not have an account with connected to an application that requested transaction data. So if a consumer has only connected one application (or applications) that Plaid did not ask to collect transaction data, but Plaid did get that data anyway, then Plaid will delete that data from its systems.
This is an important agreement in the fintech privacy space, as the collection and use of consumer data has come under increasing scrutiny over the past few years, especially given the wave of fintech and money transfer apps that have become popular with consumers. Since the major mobile platforms have tightened their developer guidelines and data protection regulations for the sharing of data this year and more and more parties to the litigation are taking mobile and data protection-related measures, we will continue to monitor developments in these areas.