Plaid, a company working to connect consumer bank accounts to services like Venmo, Robinhood, Coinbase and more, owes lots of people money as part of a multimillion-dollar lawsuit, Engadget reported Monday (Jan. 24).
The lawsuit says Plaid collected more financial data than it needed from users, and received users’ bank login information through its own Plaid Link interface — which has the look and feel of a user’s own bank account login.
Plaid, in response to the lawsuit, has denied wrongdoing, but it will pay $58 million to all consumers that have a bank account linked to any of the 5,000 client apps it has, according to the settlement website.
In a statement emailed to PYMNTS Tuesday afternoon, a Plaid spokesperson denied selling data and added consumers have control over sharing their data:
“The claims raised in the lawsuit do not reflect our practices. 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. We make our role and practices clear, and provide services that give consumers control over how and where they share their data. We believe settlement of this matter is best in light of the cost and burden associated with protracted litigation. Moving forward, we will continue to focus on empowering millions of people with control over the data they share across the thousands of applications Plaid supports.”
Per the report, Plaid has also changed a few of its policies and business practices in light of the lawsuit.
There are enough people using Plaid that a payout might be “pretty slim,” though Engadget notes that those who are U.S. residents with bank accounts might qualify if they were connected to the app between Jan. 1, 2013 and Nov. 19, 2021.
PYMNTS wrote that Plaid also recently bought Cognito, an identity verification and compliance service.
See also: Plaid Buys ID Verifier Cognito
Cognito’s platform has automatic identity verification tech and know your customer (KYC) and anti-money laundering (AML) screening, which can help onboard customers and cut down on fraud.
The CEO of Cognito, Alan Meier, wrote that Plaid Link is “nearly ubiquitous” across the FinTech ecosystem and does “a fantastic job” abstracting the thousands of banking providers the companies need to support.
“The identity and compliance story that immediately follows connecting a bank account is still, comparatively, quite fragmented and home rolled,” Meier wrote.
Meanwhile, in a blog post, Plaid said the “next major step” for the company would consist of helping developers build the best, most seamless onboarding experiences. The blog said this would come with simpler consumer journeys, including things like sending money to a friend, as well as trading stocks or cryptocurrencies.
While the terms of the deal weren’t disclosed, a report said the price tag sat at around $250 million.
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