Texas sues Allstate for alleged violations of consumer privacy law

Texas has sued Allstate, claiming its app uses cellphone data to track customers' movements and justify higher rates - Image (c) ConsumerAffairs

The state says the insurance firm used cellphone data to justify higher rates

The state of Texas has filed a lawsuit against Allstate and its subsidiary, Arity, accusing the defendants of unlawfully “collecting, using, and selling” data about the location and movement of Texans’ cell phones through secretly embedded software in mobile apps, such as Life360. 

Texas Attorney General Ken Paxton charged the information is being used by Allstate and other insurance companies to charge some customers higher premiums.

According to the lawsuit, Allstate, through its subsidiary data analytics company Arity, would pay app developers to incorporate its software to track consumers’ driving data. The complaint claims Allstate collected trillions of miles worth of location data from over 45 million consumers nationwide and used the data to create the “world’s largest driving behavior database.” 

When a consumer requested a quote or renewed their coverage, the suit claims Allstate and other insurers would use that consumer’s data to justify increasing their car insurance premium if it showed drivers covered more ground.

Paxton claims these actions violated the Texas Data Privacy and Security Act (“TDPSA”), which created heightened protections for Texans’ sensitive data, including but not limited to precise geolocation information. 

Clear notice and informed consent

The law specifically addresses privacy, requiring clear notice and informed consent regarding how a company will use consumers’ sensitive data. Paxton says Allstate never provided notice or obtained Texans’ consent to collect or sell their sensitive data. This is the first enforcement action ever filed by a State Attorney General to enforce a comprehensive data privacy law.

“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.”

This lawsuit follows Paxton’s lawsuit against General Motors and his ongoing investigations into several car manufacturers for secretly collecting and selling drivers’ highly detailed driving data.