Plaid’s paying $58 million to end a 98 million-person privacy lawsuit

Beyond the cash going to those users (and their lawyers), the agreement spells out how Plaid will inform consumers about the financial data it collects and how it uses it. It could set a standard for open banking.

Plaid CEO Zach Perret

Plaid CEO Zach Perret

Photo: George Frey/Bloomberg via Getty Images

Plaid has reached a $58 million settlement this week in a class-action lawsuit to address 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.

While that rule-making is in process and until it is complete, given Plaid's current reach in the industry, the terms of the settlement could become a kind of de facto standard for how fintech companies, banks and aggregators inform consumers about how they're using their financial data.

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. More recently Plaid, facing legal and regulatory pressures, has been focusing on making itself more accessible to consumers so that they can manage and change their connections between financial companies.

The class action, which combined five different lawsuits, alleged that 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. 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 between the up to 98 million people — whoever files a claim. If everyone did, 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.

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.

Plaid said that the claims in the suit are about things Plaid did years ago, and that it is already doing most if not all of the things it agreed to in the settlement.

"The claims raised in the lawsuit do not reflect our practices," a Plaid spokesperson said. "We help consumers safely connect their financial accounts to the apps and services they rely on. As Plaid has evolved from backend infrastructure for developers to also providing front-end solutions, we have become an industry leader in consumer privacy practices. We do not, nor have we ever, sold data."

Rachel Geman of Lieff Cabraser Heimann & Bernstein, one of the plaintiff's lawyers, said, "We look forward to presenting the settlement and its benefits to consumers to the court."

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.

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 — which is currently at this page.

Plaid has already been offering the Plaid Portal in beta form — which enables consumers to see and change what financial data it is sharing from which banks or fintechs — but will now add a prominent link to it on its homepage.

Finally, the settlement includes a detailed section of how Plaid informs consumers when they click to agree to link other financial accounts using Plaid Link. It includes specific language such as that the user's credentials are being "provided to Plaid" to clarify that Plaid is getting the data, not the bank or other financial institution. The settlement goes as far as to say that the color of the Plaid popup pane cannot be the same color as the financial institutions involved — an apparent nod to an allegation that Plaid's approval screens made consumers think they were giving approval to banks, not Plaid.

Plaid has previously said that it has been informing consumers of the data it collects on Plaid Link, which first launched in 2015 but has changed substantially since then.

The agreement only covers people who have given login credentials to Plaid, and doesn't include OAuth, a technology generally used with API connections.

The agreement doesn't stop Plaid from continuing to use login information from customers. Many smaller community banks don't have APIs for OAuth logins. But Plaid has said earlier this year that it has committed to making 75% of its traffic be done through APIs. Plaid has an API deal with Capital One and also has agreements with Wells Fargo and Chase.


A pro-China disinformation campaign is targeting rare earth miners

It’s uncommon for cyber criminals to target private industry. But a new operation has cast doubt on miners looking to gain a foothold in the West in an apparent attempt to protect China’s upper hand in a market that has become increasingly vital.

It is very uncommon for coordinated disinformation operations to target private industry, rather than governments or civil society, a cybersecurity expert says.

Photo: Goh Seng Chong/Bloomberg via Getty Images

Just when we thought the renewable energy supply chains couldn’t get more fraught, a sophisticated disinformation campaign has taken to social media to further complicate things.

Known as Dragonbridge, the campaign has existed for at least three years, but in the last few months it has shifted its focus to target several mining companies “with negative messaging in response to potential or planned rare earths production activities.” It was initially uncovered by cybersecurity firm Mandiant and peddles narratives in the Chinese interest via its network of thousands of fake social media accounts.

Keep Reading Show less
Lisa Martine Jenkins

Lisa Martine Jenkins is a senior reporter at Protocol covering climate. Lisa previously wrote for Morning Consult, Chemical Watch and the Associated Press. Lisa is currently based in Brooklyn, and is originally from the Bay Area. Find her on Twitter ( @l_m_j_) or reach out via email (

Some of the most astounding tech-enabled advances of the next decade, from cutting-edge medical research to urban traffic control and factory floor optimization, will be enabled by a device often smaller than a thumbnail: the memory chip.

While vast amounts of data are created, stored and processed every moment — by some estimates, 2.5 quintillion bytes daily — the insights in that code are unlocked by the memory chips that hold it and transfer it. “Memory will propel the next 10 years into the most transformative years in human history,” said Sanjay Mehrotra, president and CEO of Micron Technology.

Keep Reading Show less
James Daly
James Daly has a deep knowledge of creating brand voice identity, including understanding various audiences and targeting messaging accordingly. He enjoys commissioning, editing, writing, and business development, particularly in launching new ventures and building passionate audiences. Daly has led teams large and small to multiple awards and quantifiable success through a strategy built on teamwork, passion, fact-checking, intelligence, analytics, and audience growth while meeting budget goals and production deadlines in fast-paced environments. Daly is the Editorial Director of 2030 Media and a contributor at Wired.

Ripple’s CEO threatens to leave the US if it loses SEC case

CEO Brad Garlinghouse said a few countries have reached out to Ripple about relocating.

"There's no doubt that if the SEC doesn't win their case against us that that is good for crypto in the United States,” Brad Garlinghouse told Protocol.

Photo: Stephen McCarthy/Sportsfile for Collision via Getty Images

Ripple CEO Brad Garlinghouse said the crypto company will move to another country if it loses in its legal battle with the SEC.

Garlinghouse said he’s confident that Ripple will prevail against the federal regulator, which accused the company of failing to register roughly $1.4 billion in XRP tokens as securities.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at or via Google Voice at (925) 307-9342.


The Supreme Court’s EPA ruling is bad news for tech regulation, too

The justices just gave themselves a lot of discretion to smack down agency rules.

The ruling could also endanger work on competition issues by the FTC and net neutrality by the FCC.

Photo: Geoff Livingston/Getty Images

The Supreme Court’s decision last week gutting the Environmental Protection Agency’s ability to regulate greenhouse gas emissions didn’t just signal the conservative justices’ dislike of the Clean Air Act at a moment of climate crisis. It also served as a warning for anyone that would like to see more regulation of Big Tech.

At the heart of Chief Justice John Roberts’ decision in West Virginia v. EPA was a codification of the “major questions doctrine,” which, he wrote, requires “clear congressional authorization” when agencies want to regulate on areas of great “economic and political significance.”

Keep Reading Show less
Ben Brody

Ben Brody (@ BenBrodyDC) is a senior reporter at Protocol focusing on how Congress, courts and agencies affect the online world we live in. He formerly covered tech policy and lobbying (including antitrust, Section 230 and privacy) at Bloomberg News, where he previously reported on the influence industry, government ethics and the 2016 presidential election. Before that, Ben covered business news at CNNMoney and AdAge, and all manner of stories in and around New York. He still loves appearing on the New York news radio he grew up with.


Microsoft and Google are still using emotion AI, but with limits

Microsoft said accessibility goals overrode problems with emotion recognition and Google offers off-the-shelf emotion recognition technology amid growing concern over the controversial AI.

Emotion recognition is a well-established field of computer vision research; however, AI-based technologies used in an attempt to assess people’s emotional states have moved beyond the research phase.

Photo: Microsoft

Microsoft said last month it would no longer provide general use of an AI-based cloud software feature used to infer people’s emotions. However, despite its own admission that emotion recognition technology creates “risks,” it turns out the company will retain its emotion recognition capability in an app used by people with vision loss.

In fact, amid growing concerns over development and use of controversial emotion recognition in everyday software, both Microsoft and Google continue to incorporate the AI-based features in their products.

“The Seeing AI person channel enables you to recognize people and to get a description of them, including an estimate of their age and also their emotion,” said Saqib Shaikh, a software engineering manager and project lead for Seeing AI at Microsoft who helped build the app, in a tutorial about the product in a 2017 Microsoft video.

Keep Reading Show less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories