Plaid Pays $58 Million in Privacy Lawsuit
PowerKee’s Bastion of Privacy #36 - Fintech service provider penalised for breaching data privacy laws and PowerKee wallet release
Multidimensional fintech service provider Plaid has reached an agreement to pay $58 million as a result of data privacy breaches. The company was accused of obtaining and using the bank account details and other credentials of its customers without their consent.
Plaid was accused of using artificial interfaces that looked like bank login dashboards to receive the details of their users. Plaid customers claimed that the company sold the data to interested third parties.
In the latest Bastion of Privacy, we highlight details of the Plaid case, considering the impact on customers and the litigation process to reach the settlement. We also highlight how the centralized infrastructure of Plaid made their customers susceptible to such an attack. Before we jump into this week’s content, we have a new launch announcement.
PowerKee Wallet Release
After a lengthy development and testing process, we are thrilled to launch the PowerKee wallet to the public on Tuesday, 17th of August, 10:00PM Singapore. PowerKee wallet users can expect a sublime user interface combined with cutting-edge privacy technology. PowerKee users can confidently store, transfer, and anonymize their KEE through our wallet solution. The wallet release had to be postponed as we found a bug shortly before the release today. We tried solving the bug till now but decided to have a smooth release as mentioned above.
Multiple class actions against Plaid
Founded in 2012, Plaid is a company that provides infrastructure for fintech companies across the world. These companies integrate Plaid’s infrastructure to allow their applications to connect with users’ bank accounts for financial activities.
In May 2020, a class action was filed against Plaid by a group of users represented by Herrera Purdy LLP. According to the lawsuit, the number of Plaid users affected was in the tens of millions across multiple software embedded in hundreds of apps. Some of the apps include Coinbase, Cash App, Stripe, and Venmo. Plaid was alleged to have violated laws concerning consumer privacy and data protection.
In July 2020, another class-action lawsuit detailing the same allegations was filed against Plaid, this time in the northern district of California. The number of individual accounts claimed to have been affected by the new lawsuit tops 200 million over several years. Plaid denied such claims, labeling the class action as “a copycat lawsuit” against which it will defend itself.
The latest developments reveal that Plaid has agreed to pay $58 million as a settlement to resolve the claims by consumers. However, according to Michael Rhodes of Cooley, lead counsel for Plaid, this is a settlement that “covers claims from the earliest days of the company”. He also noted that things are different now, as Plaid is no longer involved in such malpractice that puts consumers at risk.
Malpractices like the Plaid case are some of the risks associated with using the technical infrastructure of companies that are centralized. The power to control users’ data resides completely in the hands of the company. Users need to place trust in their company not to abuse this power. In the case of Plaid, that backfired on their user.
A new approach towards data protection
The case between Plaid and its users is typical in the digital finance industry. There are severe shortcomings to storing data with a corporation. The data privacy of users is never guaranteed when third parties are involved.
Privacy-focused blockchain solutions like PowerKee offer alternative approaches for storing data and provide strong price assurances to those that use them. In a world where corporations increasingly abuse our trust, privacy-focused blockchains are one of the few alternatives that allow us to regain control of our data.
About PowerKee
PowerKee is a cryptocurrency network that makes privacy easy. Users can transact cheaply and instantly while maintaining anonymity. The PowerKee protocol uses a mixture of zero-knowledge proofs and coin mixing to provide strong privacy assurances to its users.