SAN FRANCISCO–The fintech Plaid has reached a $58 million settlement in a class-action lawsuit that alleged privacy allegations against the company. Plaid admitted no wrongdoing in the settlement, but agreed to a number of terms on how it informs consumers on the data it collects.
The agreement comes as regulators are focusing on consumer financial data and working on changes to the Dodd-Frank Act's Rule 1033 which could change how consumers, banks and fintech companies can access financial data, noted legal analysts.
The class action, which combined five different lawsuits, had alleged consumers didn't know they were giving Plaid their data when they signed up for fintech apps. Some of the claims had previously been dismissed, and the judge in the case still needs to give final approval to the deal.
The settlement covers an estimated 98 million people in the U.S. who have used Plaid's services between 2013 and today. Of the total $58 million, $14.5 million will go to lawyers on the case. The remaining amount will be split up by those among that 98 million people who file a claim. If everyone does so, the settlement would be worth about 44 cents apiece. The named claimants will get $5,000 each. Any money left over will be donated to two nonprofits.
According to Protocol.com, the larger issue for Plaid is the agreement on its policies going forward. In the agreement Plaid agreed to several things, including providing more details about financial information it collects and operating a portal for consumers to manage their data, the report noted.
The Settlement
In the settlement, Plaid agreed to provide details of information it collects from people's financial accounts, including a "plain-language list" of information it collects, reasons for collecting it and to explain the source and use of the information and who it's being shared with, Protocol.com reported.
Plaid also agreed to provide an explanation of its data deletion and retention policies, and to only store data that the user specifically requests or is needed.
The company said it will provide a section explaining privacy controls users have for their data and to include a "prominent" reference to its Plaid Portal on its homepage and a dedicated page with information about its data security.
Plaid agreed to be acquired last year by Visa, but the deal fell through after regulatory opposition — and Plaid went on to raise new funding at a value of $13.4 billion, almost triple what the Visa deal was worth.