Partial dismissal of privacy lawsuit against Plaid granted, but some key claims will move forward

Despite some components of a privacy class-action lawsuit against Plaid being thrown out last week, some key claims will move forward, forcing the company to defend its data-aggregation practices.

Why should we care?
Plaid acts as an intermediary when third-party apps fetch account data. Plaid stands accused of illegally collecting information from more than 200 million consumers’ financial accounts through third-party financial apps (including Venmo, Stripe, and the Cash app). The lawsuit alleges the company sold or misused it without telling customers. There are two major components to the lawsuit: 1) alleged invasion of privacy and anti-phishing claims; and 2) computer fraud, Stored Communications Act, and unfair competition claims. An order from a California federal magistrate judge dated April 30 amounts to a partial victory for Plaid, because only the second set of claims (listed above), including computer fraud, were dismissed. This means the privacy and anti-phishing claims will move forward, adding pressure on Plaid to defend its practices. "While certain other claims may go forward, this is based only on the literal allegations of the current complaint which we think are factually misguided and we look forward to challenging them on the merits as the case unfolds,” Plaid counsel Michael Rhodes of Cooley LLP told Law360. Rachel Geman, a partner at Lieff Cabraser who represents the plaintiffs, said in a statement “We’re very pleased by the ruling and the recognition that we’ve adequately alleged an invasion of privacy that was achieved via deceit.” Meanwhile, a lawsuit brought against Plaid by TD Bank last year, which alleged Plaid used the TD logo for data collection, was recently settled and both parties have filed to dismiss the case.