Allstate Corp. Faces Lawsuit for Allegedly Selling Data

HIGHLIGHTS:

• Texas filed a lawsuit against Allstate Corp. for allegedly selling consumers’ driving behavior data.
• The company allegedly sold the data to mobile devices, in-car devices, and vehicles.
• The data covers trillions of miles of driving behavior

Two individuals appear to be engaged in negotiations. Photo by Andrea Piacquadio on Pexels

The state of Texas has filed a lawsuit against insurance company Allstate Corp. and its subsidiaries over allegations that it illegally collected and sold consumers’ driving behavior data.

According to a report, Allstate secretly collected and sold its consumers’ data to mobile devices, in-car devices, and vehicles covering trillions of miles of their driving behavior to build the world’s largest driving behavior database which it shared with third parties, including other car insurance carriers.

“Millions of Americans, including Texans were never informed about, nor consented to, defendants’ continuous collection and sale of their data,” the lawsuit said.

Millions Paid to App Developers

Texas Attorney General Ken Paxton argued that Allstate collected much of its data by maintaining active connections with consumers’ mobile devices and harvesting the data directly from their phones.

The lawsuit claimed that the company developed software integrated into third-party applications so that when consumers downloaded the applications, they unknowingly downloaded Allstate’s software as well.

“Once defendants’ software was downloaded onto a consumer’s device, defendants could monitor the consumer’s location and movement in real time,” the lawsuit read.

Paxton further claimed that Allstate had paid application developers millions of dollars to integrate its software into their apps and incentivized them with “generous” bonuses for increasing the size of the dataset.

After collecting the data, the company would then sell information to other insurers and use the data for its insurance underwriting.

Allstate was said to have violated the Texas Data Privacy and Security Act, the state’s Data Broker Law, and the Texas Insurance Code’s prohibition on unfair and deceptive acts and practices in the business of insurance.

Paxton demanded a jury trial and requested that Allstate pay civil penalties and make full restitution to all consumers who suffered a loss as a result of its alleged actions.

Last year, an Arizona federal judge had refused to dismiss an Allstate class action lawsuit alleging the company underpaid policyholders for property damage claims, challenging its method of calculating actual cash value payment obligations for structural property losses.