Biometrics Firms Caught in Data Privacy Complaints Turn to Arbitration

By Jim Nash

Short of actually winning a biometrics privacy lawsuit in the U.S. states of Illinois and California there seems only one avenue for avoiding scary-sized damages – and it isn’t available to all companies.

It’s not insurance. Insurers do their best to avoid paying on privacy claims, and damages can overtop maximum policy payouts.

There is another better-than-nothing option. Executives accused of playing loose with consumers’ biometric information can ask judges to force plaintiffs into binding arbitration agreements – if buyers have, in fact, agreed to them.

Arbitration, generally, is more favorable to business defendants and, even cumulative, damages are smaller than in class actions.

Voice biometrics vendor Nuance is asking a federal judge in the Northern District of California to force a putative class action (case 4:22-cv-05827) into arbitration.

JPMorgan Chase Bank hired Nuance to authenticate customers and spot fraud based on a person’s voice when they call Chase. Plaintiffs say they did not consent to this, making it a violation of California’s Invasion of Privacy Act by Nuance.

The plaintiffs are fighting Nuance’s binding arbitration strategy. Nuance maintains that they knowingly signed agreements with Chase spelling out its dispute resolution rules, which lawyers for the software company say cover their client.

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A hearing on the question has been scheduled for October 26.

An arbitration hearing has already been held in an Illinois Biometric Information Privacy Act case filed against app maker Prisma Labs, and Prisma prevailed.

A federal judge also sitting in the Northern District of California has stayed a putative class action while plaintiffs are first forced into arbitration.

Prisma makes Lensa, software consumers can use create AI-augmented face photos. The plaintiffs accuse Prisma in case 23-cv-00680 of storing users’ face templates without consent, in violation of BIPA.

The judge sided with the vendor, saying that the plaintiffs agreed to take any dispute to arbitration.

Source: Biometric Update

Jim Nash is a business journalist. His byline has appeared in The New York Times, Investors Business Daily, Robotics Business Review and other publications. You can find Jim on LinkedIn.

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