Plaid, a San-Francisco-based fintech startup that was purchased by Visa for $5.3 billion earlier this year, is now facing a final hurdle from a class action alleging its value proposition depends on a “massive invasion” of the privacy of over 200 million bank and brokerage accounts.
Filed on May 5, the suit alleges that Plaid spoofs bank and investment firm logins to finagle a vast “trove” of “wrongfully obtained” data that it resells as “consumer behavioral insights.” Plaid is also alleged to have failed to disclose its process.
It should come as no surprise that the lawsuit zeroes in on a hot button issue in the financial services industry. The Federal Trade Commission (FTC) brought nine data security enforcement actions last year. The actions targeted companies with direct consumer relationships and service providers like Plaid, which will continue to be an area of FTC interest, according to the agency. Earlier this year, three Capitol Hill Democrats urged the FTC to probe Envestnet data subsidiary Yodlee over its data collection practices. The move came just four days after Visa bought Plaid.
For all that, the class action may just be an opportunistic nuisance lawsuit, says Ari Sonneberg, partner and chief marketing officer at Boston-based Wagner Law Group, via email. “The suit smells like a shakedown for several reasons, not the least of which is timing.”
For its part, Plaid isn’t conceding anything. “We are vigorously defending ourselves against the lawsuit and reject its baseless claims,” said company spokeswoman Natalie Giannangeli, via email.
So we either have a case of sophisticated data fraud or a shakedown class action lawsuit against an innocent company who got a $5.3 billion check from Visa. The courts will have to figure this one out. Like bank branches, disputes are EVERYWHERE. And they get legal and negatively affect YOU and YOUR business, especially things like contract issues, landlord/tenant matters, nuisance ADA claims and even collections — call in the good guy business litigator, Dean Sperling to resolve YOUR matter with YOUR best interests in mind!
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