On April 30, 2021 a California district court trimmed various federal privacy-related claims, including the Computer Fraud and Abuse Act (CFAA) claim, from a highly-visible, ongoing putative class action against fintech services company Plaid Inc. (“Plaid”), but allowed other state law privacy claims to go forward.  The lawsuit involves Plaid’s alleged collection and use of consumers’ banking login credentials and later processing and selling of such financial transaction data to third parties without adequate notice or consent (Cottle v. Plaid Inc., No. 20-3056 (N.D. Cal. Apr. 30, 2021).

The court’s decision did not delve deeply in the merits of the CFAA claim, as it was dismissed on procedural grounds; similarly, resolution of the major issues of the case about invasion of privacy and the adequacy of consent to access consumers’ bank accounts and collect/aggregate data was not achieved at this early stage of the litigation.  Thus, this case is just beginning and is certainly one to watch to see how the unsettled areas of mobile privacy and CFAA “unauthorized access” are further developed.

On December 9, 2020, the Wall Street Journal reported that Apple and Google will block the data broker X-Mode Social Inc. (“X-Mode”) from collecting location data from iPhone and Android users. Apple and Google have reportedly informed app developers to remove the X-Mode social tracking SDK from all of their apps within a short period of time or risk removal from the platforms’ app stores.  This action apparently was prompted by reports that X-Mode was selling location data to certain defense contractors and government entities.

The WSJ report suggests that Apple and Google notified Senator Ron Wyden about this action.  Senator Wyden and a group of other Senators have been soliciting government inquiries over the last several months into the sale of location data to government contractors and agencies. It is Senator Wyden’s position that such sales of users’ location data by commercial data brokers to government entities are unlawful without a warrant (citing the Supreme Court case, Carpenter v. United States, 138 S.Ct. 2206 (2018), which held that the acquisition of cell-site location information was a Fourth Amendment search).

Senator Wyden’s scrutiny over such practices does not seem to be limited to sale of location data to government sources, but more so toward the wider data tracking ecosystem. He was one of the senators that earlier this year sent a letter to FTC Chairman Joseph J. Simons urging the agency to investigate whether analytics firm Yodlee’s financial data collection practices were violating the FTC Act (a request which led to at least one civil investigative demand being issued by the FTC to Yodlee and a putative class action suit over such practices). In the WSJ article, Wyden is quoted as stating: “Apple and Google deserve credit for doing the right thing and exiling X-Mode Social, the most high-profile tracking company, from their app stores. But there’s still far more work to be done to protect Americans’ privacy, including rooting out the many other data brokers that are siphoning data from Americans’ phones.”

Last week, a putative privacy-related class action was filed in California district court against financial analytics firm Envestnet, Inc. (“Envestnet”), which operates Yodlee, Inc. (“Yodlee”). (Wesch v. Yodlee Inc., No. 20-05991 (N.D. Cal. filed Aug. 25, 2020)). According to the complaint, Yodlee is one of the largest financial data aggregators in the world and through its software platforms, which are built into various fintech products offered by financial institutions, it aggregates financial data such as bank balances and credit card transaction histories from individuals in the United States. The crux of the suit is that Yodlee collects and then sells access to such anonymized financial data without meaningful notice to consumers, and stores or transmits such data without adequate security, all in violation of California and federal privacy laws.

The timing of this case is interesting, as it comes on the heels of the recent settlement of the litigation the between the City Attorney of Los Angeles and the operator of a weather app over claims that locational information collected through the weather app was being sold to third parties without adequate permission from the user of the app.

Last week, Democratic Senators Ron Wyden and Sherrod Brown and Congresswoman Anna Eshoo sent a letter to FTC Chairman Joseph J. Simons urging the agency to investigate whether analytics firm Envestnet, Inc. (which operates Yodlee) was violating the FTC Act.

According to the letter, Yodlee is the largest consumer financial data aggregator in the United States.  It aggregates financial information from banks, credit card companies and other financial services providers with consumer consent, and maintains a database of credit and debit card transactions of tens of millions of consumers. The letter asserts that Yodlee is used by over 1,200 companies to offer online personal finance tools to consumers.  Yodlee offers its software and platform to fintech providers, banks, financial apps, consumers and others to help process financial data from various sources.

The crux of the letter claims that Envestnet sells access to such consumer data without meaningful notice to consumers of such sale.  The members of Congress reject Envestment’s position that consumer privacy is protected because the data it sells is anonymized, and claim that Envestnet does not inform consumers that their personal financial data is being sold, but rather relies on its partners to make such disclosures in privacy policies or terms of service. The letter asserts that this is not sufficient, as Envestnet does not appear to take any steps to ensure that its partners give such notice, and even if they did, such practices place the burden on consumers to find such a notice “buried in small print” and then search for a way to opt out of such data sharing.

On January 7, 2019, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced its 2020 examination priorities. In doing so, OCIE identified certain areas of technology-related concern, and in particular, on the issue of alternative data and cybersecurity. [For a more detailed review of OCIE’s

Last week the WSJ published an article detailing how companies are monetizing smartphone location data by selling it to hedge fund clients.  The data vendor featured in the WSJ article obtains geolocation data from about 1,000 apps that fund managers use to predict trends involving public companies.  However, as we’ve