Possible Visa subsidiary Plaid is facing a new class-action lawsuit in the United States for violation of user data privacy.
The court case was filed by four new plaintiffs at the northern district court of California alleging that Plaid has illegally collected information on over 200 million distinct financial accounts. These are the users of popular payment platforms including Venmo, Coinbase, Square’s Cash App, and Stripe.
Plaid offers technical infrastructure APIs that connect consumers, traditional financial institutions, and developers; and thus links multiple accounts of its users into a single platform. The company started talks to be acquired by Visa earlier this year for $5.3 billion.
Data privacy has become a great concern
The court filing alleged that the Fintech obtained “direct and full access” to consumers’ personal banking information through logins and then selling them for its own gain. The lawsuit also highlighted that the acquired data was not essential for Plaid’s services.
The fintech has been accused of showing identical login page of payment platforms prompting the users to login, but these accounts were fully controlled by Plaid.
“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 stated. “Plaid has unfairly benefited from the personal information of millions of Americans and wrongfully intruded upon their private financial affairs.”
Moreover, when users allow permission of data access to the fintech, the company gets access to the entire year of banking details of the customer, the lawsuit alleged.
The fintech was slapped with another similar class-action lawsuit last month for “data plumbing” from popular services like Venmo, Stripe, Cash App, and Robinhood. The company, however, denied all the allegations saying that it never sold any user data.
"This copycat lawsuit is baseless and Plaid will vigorously defend itself. Plaid does not sell or rent consumers' personal information and personal information is only obtained with consent. We firmly believe that consumers should have permission-based access to and control over their financial data, and embody these principles in our practices," a Plaid spokesperson told Finance Magnates.
