
Texas AG sues Allstate, Arity for allegedly secretly creating world’s largest driver behavior database
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Texas Attorney General Ken Paxton announced Monday that his office has filed suit against Allstate and its subsidiary, Arity, for unlawfully collecting, using and selling data about the location and movement of Texans’ cell phones through “secretly embedded software in mobile apps,” according to a press release.
The release claims Allstate and other insurers used data collected from apps, such as Life360, to justify raising Texans’ insurance rates.
Allstate created the “world’s largest driving behavior database” and collected trillions of miles worth of location data from over 45 million consumers nationwide, the release says. It says that via Arity, Allstate paid app developers to incorporate its software to track consumers’ driving data.
“To encourage developers to adopt defendants’ software, defendants paid app developers millions of dollars to integrate defendants’ software into their apps,” according to the suit. Defendants further incentivized developer participation by creating generous bonus incentives for increasing the size of their dataset.”
According to the suit. data collected includes the phone’s geolocation data, accelerometer data, magnetometer data, and gyroscopic data, which monitors details such as the phone’s altitude, longitude, latitude, bearing, GPS time, speed and accuracy.
Data was captured every 15 seconds or less from 40 million active mobile connections, the suit says.
“Once collected, defendants found several ways to monetize the ill-gotten data, including by selling access to defendants’ driving behavior database to other Insurers and using the data for Allstate defendants’ own insurance underwriting,” the suit says. “If a consumer requested a car insurance quote or had to renew their coverage, Insurers would access that consumer’s driving behavior in defendants’ database. Insurers then used that consumer’s data to justify increasing their car insurance premiums, denying them coverage, or dropping them from coverage.”
The insurance company’s actions violate the Texas Data Privacy and Security Act (TDPSA), the release says. The law requires clear notice and informed consent regarding how a company will use Texans’ consent to collect or sell their sensitive data, according to the release.
“Our investigation revealed that Allstate and Arity paid mobile apps millions of dollars to install Allstate’s tracking software,” said Paxton in the release. “The personal data of millions of Americans was sold to insurance companies without their knowledge or consent in violation of the law. Texans deserve better and we will hold all these companies accountable.”
This is the first enforcement action filed by the State Attorney General to enforce a comprehensive data privacy law, the release says.
Last Month, Paxton sent notice of violation to Arity claiming it fails to clearly inform consumers about the data it collects and how it is sold.
Allstate Insurance has participated in past roundtables with federal and state officials to discuss the importance of the “right to repair” and joined the call for federal legislation. Allstate is also a listed member of the CAR Coalition.
According to their website “The CAR Coalition believes consumers deserve the right to control who has access to their vehicle-generated data and when.”
In August, Paxton filed suit against General Motors and subsidiary OnStar for “false, deceptive, and misleading” business practices related to the alleged collection and sale of more than 1.8 million Texans’ private driving data to insurance companies.
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