Insurance provider Allstate finds itself in hot water after Texas Attorney General Ken Paxton alleges the company paid smartphone app developers to track consumers without their knowledge.
Texas Attorney-General Ken Paxton unleashed a new lawsuit against insurance provider Allstate over deceptive data collection practices.
Data security has rapidly become a hot-button issue in the automotive industry as the automotive market gets vehicles that are more digitally connected than ever. This digital revolution has also expanded to include auto insurance companies as they explore new ways to gather data about consumers. However, those companies are also expected to maintain a high degree of security over who and how sensitive data is shared.
Allstate is finding out the hard way how important that is with a newly released report from the Texas Attorney General claiming the insurance giant paid smartphone app developers to secretly track consumers without their knowledge in a potential breach of data security which builds on top of other instances of improper data usage by automakers and insurance companies.
An illicit operation of stealth
The lawsuit alleges Allstate and data broker Arity paid smartphone app developers to secretly track consumers while selling the collected data to other insurance companies.
According to Paxton’s newly released lawsuit, Allstate collected its data through data broker Arity with that firm allegedly paying “millions of dollars” to secretly incorporate its software development kit into their apps and products. The data secretly collected by these efforts included the precise geolocation of a smart device, the accelerometer data, latitude and longitudinal coordinates, and more. The complaint also goes on to allege that Arity had the app developers license their personal information to Arity and Allstate so the two companies could create a database to “match specific individuals to the Arity SDK Data.” This portion of the data included names, addresses, zipcodes, phone numbers, and advertising identifiers with the proverbial cherry on top being data it bought from automakers.
Paxton claims that all of these actions violate the Texas Data Privacy and Security Act which requires companies like Allstate to notify customers of how their data is being used and to also get proper consent from customers in the state before the data can be used which is what Allstate failed to do. Allstate’s data-related legal troubles are part of a larger mosaic of similar incidents that have merged in recent years and fall on the heels of fellow data broker Verisik secretly purchasing sensitive information from automakers to create databases of consumer information.
More Consumer Data Stories
- Eight Automakers Caught Misusing Consumer Data
- Texas Sues GM for Selling Owner Data to Insurance Companies
- Your Smartphone May Be Snitching On You to Your Insurance Company
Allstate was raking in profit from data sales
This incident is the latest in several high profile cases that are placing a bigger spotlight on data collection and what’s being sold to various third parties.
In addition to secretly collecting consumer data, Allstate is also accused of selling the data it collected to other auto insurance companies who then used the data as justification to potentially increase an individual’s car insurance premium when they renewed their policy or even asked for a quote with Allstate themselves using the data to underwrite its own policies.
“The personal data of millions of Americans was sold to insurance companies without their knowledge or consent in violation of the law,” said Paxton in a statement. “Texans deserve better and we will hold all these companies accountable.” The state’s is aggressively going after companies that violate the state’s new data protection laws, including automakers.
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