Plaid Inc., a financial technology company whose software is used by payment and crypto trading apps such as Coinbase, Robinhood, Venmo, and others, has been sued for allegedly accessing users’ bank accounts and collecting financial information without their permission, according to a class-action lawsuit.
According to the lawsuit, Plaid is alleged to deceptively obtain bank account information from payment app customers, accessing bank information dating back up to five years with an average of 3,700 transactions per consumer.
The lawsuit, which was filed in May 2020, claims that when a user inputs their bank login information into any Plaid-enabled payment app, the credentials, security layers, including security questions and answers and one-time passwords, are sent directly to Plaid rather than to the bank.
According to reports, the app also collects information on accounts maintained by others, such as relatives and children, and has a database of over 200 million different financial accounts. Plaid used the obtained information to access the consumer’s bank account many times a day, collecting sensitive information and then selling it. Plaid’s data scraping, according to the lawsuit, has resulted in violations of privacy and considerable economic losses for users.
Users in the United States who linked their financial accounts using Plaid’s integrated software before November 20, 2021 are included in the proposed class action settlement.
Plaid Inc. initially denied the allegations, claiming that they were unfounded and that it planned to defend itself fiercely. According to a corporate statement, “Plaid firmly believes that consumers should have permission-based access to and control over their financial data, and embodies these principles in our practices.”To be clear, Plaid does not obtain consumers’ personal information without their consent, nor does Plaid sell or rent consumers’ personal information.”
As of August 20, 2021, the fintech company agreed to pay a $58 million settlement to satisfy their claims. Plaid did not admit any wrongdoing as part of the settlement, but the company did agree to several terms about how it informs users about the data it gathers.
As per information from the settlement website, if you lived in the United States and connected a financial account to a qualifying payment or crypto trading app between January 1, 2013, and November 19, 2021, you may be able to join in the class action settlement. The settlement website states that claims must be submitted at www.plaidsettlement.com/submit-claim or postmarked by April 28, 2022.
You can look up certain apps or services linked to your financial accounts on the internet and check if they utilize Plaid.
