Fintech company Plaid, consumers reach $58M settlement agreement in privacy suit

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Financial tech company Plaid has reached a $58 million settlement agreement in a lawsuit where customers alleged that the company obtained and used their banking information without permission.

Plaid’s service connects customer banking accounts to financial apps like Venmo and Robinhood. The plaintiffs claimed that Plaid misled them and violated their privacy by obtaining data from their financial accounts without consent, getting their bank login information through a deceptive interface meant to look like customers’ own bank login screens and selling their transaction histories.

Under the settlement agreement, still subject to court approval, Plaid must also delete some data from its systems, minimize the data it stores, improve disclosures of how it uses data and maintain disclosures and websites about its security practices.

“We do not, nor have we ever, sold data,” a Plaid spokesperson said. “We make our role and practices clear, and provide services that give consumers control over how and where they share their data. We believe settlement of this matter is best in light of the cost and burden associated with protracted litigation.”

The company’s global head of privacy also wrote a blog post on Friday about the company’s approach to consumer privacy.

The class action lawsuit included five actions consolidated last year. A judge narrowed the suit in May, but allowed it to go forward on sufficient allegations that Plaid violated California’s anti-phishing law and other claims.

The proposed settlement comes as the Consumer Financial Protection Bureau is considering rules on consumer access to financial records, and as Congress takes a closer look at the fintech industry.

Last year, Visa sought to buy Plaid for $5.3 billion, but ran into opposition from the Department of Justice and the deal was called off in January. An April report placed Plaid’s valuation at $13.4 billion.

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Consumer Financial Protection Bureau, Financial services, fintech, Plaid, privacy, RobinHood, U.S. courts, Venmo
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