FinTech: Irate Users Haul Plaid To Court on Alleged Privacy Violations

July 20, 2020 | FinTech, News
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Two class-action lawsuits charge that fintech Plaid infringed the privacy of the plaintiffs.

The suits, both filed within the space of a month, charge Plaid, the fintech that sold to Visa (NYSE: V) for $5.3 billion in January, violated their data privacy.

First class-action suit

In the first suit filed on June 25, two men in California made accusations (among others) that Plaid got its hands on their banking credentials in a misleading way. They said it scrapes off more banking information that it needs for the customer’s requirement, and maybe palms off that data to other entities. The two plaintiffs had signed up with Venmo to send and receive payments.

However, according to American Banker, a Plaid spokesperson refuted the allegations calling them “baseless.” They said the company does not sell consumers’ data, and that the said data was obtained and used with consumer consent.

Furthermore, the plaintiffs claim they do not recall having received any privacy policy notification from either Plaid or Venmo. They also do not remember linking up their bank accounts to Venmo via Plaid.

“Plaid induces consumers to hand over their private bank login credentials by making it appear those credentials are being communicated directly to consumers’ banks,” their lawsuit alleges.

Second class-action suit

Meanwhile, litigants filed the second class-action suit on July 17 in the northern district court of California.

According to Finance Magnates, four new plaintiffs alleged that the fintech illegally collected information on over 200 million financial accounts. These consumers signed up for payment services with platforms such as Venmo, Coinbase, Square’s (NYSE: SQ) Cash App, and Stripe.

This suit also charged that the company gathered non-essential data, and then sold it for profit.

“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,” the lawsuit states. “Plaid has unfairly benefited from the personal information of millions of Americans and wrongfully intruded upon their private financial affairs.”

Related Story:  Visa Snaps Up Fintech Network Plaid for $5.3 Billion                                                  

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