Texas sues Allstate alleging it illegally collected and sold users’ data

Texas sued Allstate on Monday alleging the company illegally collected and sold users’ information without their knowledge or consent.

The lawsuit was filed less than two months after the OAG notified Allstate’s subsidiary, Arity, that it was in violation of the Texas Business and Commerce Code and Texas Data Privacy and Security Act.

The lawsuit was filed in District Court of Montgomery County and requests a trial by jury. It names the Allstate Corporation, Allstate Insurance Company, Allstate Vehicle and Property Insurance Company, Arity, LLC, Arity 875, LLC, and Arity Services, LLC as defendants.

Allstate et al “conspired to secretly collect and sell ‘trillions of miles’ of consumers’ ‘driving behavior’ data from mobile devices, in-car devices, and vehicles,” the 46-page complaint states. They then “used the illicitly obtained data to build the ‘world’s largest driving behavior database,’ housing the driving behavior of over 45 million Americans” to support its car insurance business and “profit from selling the driving behavior data to third parties, including other car insurance carriers.”

Millions of Americans, including Texans, were never informed about, nor consented to, having their data collected and sold, the lawsuit argues. Unbeknownst to Allstate customers, data about their driving was harvested directly from their phones through third-party phone apps. When the apps were downloaded, they weren’t informed that Allstate software was also downloaded on their phones to track their location and movement in real-time, the complaint says.

Data collected and sold “included a 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,” the complaint states.

The data was collected, used and sold “through secretly embedded software in mobile apps, such as Life360. Allstate and other insurers then used the covertly obtained data to justify raising Texans’ insurance rates.”

Allstate also purchased data about vehicles directly from car manufacturers “to better account for their inability to distinguish whether a person was actually driving based on the location and movements of their phone.” Data was purchased from Chrysler, Dodge, Fiat, Jeep, Lexus, Maserati, Mazda, Ram and Toyota for Allstate’s “insurance underwriting purposes,” the complaint states.

When consumers requested quotes or renewed their coverage, Allstate and other insurers would use the data it collected to justify increasing car insurance premiums.

Doing so violated state law, which was implemented to increase protections for Texans’ data, including precise geolocation information. The law requires clear notice and informed consent about how a company will use Texans’ data. Allstate didn’t provide notice or obtain consent to collect or sell the data, the complaint explains.

“Our investigation revealed that Allstate and Arity paid mobile apps millions of dollars to install Allstate’s tracking software,” Paxton said. “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.”

The lawsuit follows one Paxton filed against General Motors alleging it also secretly collected and sold its customers’ data. In that case, an investigation was also launched, which found that General Motors “engaged in egregious business practices that violated Texans’ privacy and broke the law.”

“Companies are using invasive technology to violate the rights of our citizens in unthinkable ways,” Paxton said. “Millions of American drivers wanted to buy a car, not a comprehensive surveillance system that unlawfully records information about every drive they take and sells their data to any company willing to pay for it.”

Last November, a class action lawsuit was settled for $25 million after policyholders accused Allstate of inflating premiums, unfairly denying claims, regularly denying legitimate claims, misusing uninsured motorist and underinsured motorist benefits, and using strategies to reduce payouts, according to a law firm representing the plaintiffs.