Plaid to Pay $58M Settlement Over Venmo, Coinbase Privacy Breach Claims

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Plaid Privacy Breach Class Action Lawsuit Overview:

• Who: Plaid Inc. has agreed to settle with consumers who filed a class action lawsuit against the financial services company.
• Why: Consumers allege Plaid Inc. accessed private data from payment apps without their consent.
• Where: The class action lawsuit was filed in federal court in Northern California.

A financial services company accused of accessing consumers’ private data on Venmo and Coinbase without their consent has agreed to pay $58 million to settle the class action claims.

In a proposed settlement filed in California federal court late last Thursday, Plaid Inc. has agreed to set up a $58 million cash fund to compensate a nationwide Class of people whose bank accounts were accessed without their knowledge since January 2013, Law360 reports. 

Plaid is a financial software company that helps connect app users with their bank accounts.

In a class action lawsuit filed in May 2020, plaintiffs accused Plaid of setting up a login page that mirrored the look and feel of the login screens of their own bank accounts.

Consumers would then enter their login information, thinking it was for their personal accounts, the plaintiffs allege. Plaid then used the login information to collect private transaction history, investment history, salary information and other personal identifying information, the class action lawsuit reportedly alleges.

The $58 million proposed settlement would end claims Plaid breached privacy rights of users by hiding the way it collects bank login information when consumers used apps that partnered with Plaid, like Coinbase and Venmo.

Attorneys are seeking up to $14.5 million in fees through the settlement, and consumers who make a claim will get a set payout figure that has not yet been determined, Law360 reports. The settlement also forces Plaid to make changes to its privacy processes and user interface. 

On Friday, Plaid said in a statement that it was already making privacy changes mandated by the settlement, and that the company had changed since 2013, Law360 reports.

If there are any funds left over after attorneys’ fees and claim payments have come out, the money will go to the nonprofit Privacy Rights Clearinghouse and Consumer Reports. 

Meanwhile, the popular payback app Venmo is reportedly under investigation by the Consumer Finance Protection Bureau over its collection practices, including how it pursues consumers who owe money.

The consumer watchdog agency slapped Venmo’s parent company PayPal with a Civil Investigative Demand in February, with the filing seeking information “related to Venmo’s unauthorized funds transfers and collections processes, and related matters.”

Do you use Venmo or Coinbase? Will you be looking into making a claim under this settlement? Let us know in the comments! 

The consumers are represented by Shawn M. Kennedy, Bret D. Hembd, Nicomedes Sy Herrera and Laura E. Seidl of Herrera Kennedy LLP, Rachel Geman, Rhea Ghosh, Michael W. Sobol and Melissa Gardner of Lieff Cabraser Heimann & Bernstein LLP and Christopher J. Cormier, C. Jacob Gower, Warren T. Burns and Russell Herman of Burns Charest LLP.

The Plaid Privacy Breach Class Action Settlement is In re: Plaid Inc. Privacy Litigation, Case No. 4:20-cv-03056, in the U.S. District Court for the Northern District of California.

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