A source close to Plaid – the company that serves as the “data plumber” at Coinbase, Robin Hood, Square’s Cash App and many others – denied all allegations in the class action complaint that was recently filed.
The entire complaint is based on the allegation that Plaid is selling user data to the “highest bidder”. A spokesperson for Plaid has described this allegation as “unfounded”
A lucrative operation?
A source close to Plaid’s legal team, speaking to Cointelegraph on condition of anonymity, reiterated that the company has never sold user data in any form. They also felt that this was simply a “lucrative operation” for the lawyers:
“They see companies in a special position, such as being acquired or having an investment. And this is a very lucrative operation for them.”
This statement refers to the fact that Plaid is in the process of being acquired by Visa – an agreement that has not yet been finalised. This puts Plaid in a vulnerable position.
Visa has not responded to Cointelegraph’s request for comments.
The PNC bank blocked Plaid in 2019
The complaint alleges that Plaid has been collecting data for five years and in the future “in perpetuity.” It also alleges that Plaid has been collecting health-related data without storing it under the Health Insurance Portability and Accountability Act, or HIPAA. Our source has assured Cointelegraph that Plaid only stores the amount of data necessary for the services it provides. They also stated that the company does not intentionally collect health data from users.
The source also denied the allegation that Plaid stores users’ login credentials in ‘plain text’, making it vulnerable to hackers. On the contrary, the company takes “security very seriously,” the source said.
The complaint mentions a case from 2019 where the PNC bank blocked Plaid. It said the reason was that “aggregators access account numbers, many store them indefinitely, often without the customers’ knowledge”. Our source declined to comment on this case.
Coinbase relies on the Plaintiff’s
“For U.S. customers, you can check your account in just a few minutes by entering your banking references. You may be familiar with this process if you have already checked a bank account on Paypal or a similar service. These bank references are never sent to Coinbase, but are shared with an integrated trusted third party, Plaid Technologies, Inc. to facilitate instant account verification. This service may store the references provided for verification purposes or use them for each transaction to prevent fraud, and to help verify that a sufficient balance is available to process your transaction”
Coinbase did not respond to our request for comments in time for publication.
As we have learned from many legal cases, a resolution may take some time. On the other hand, the unfinished acquisition of Plaid puts it in a vulnerable position. This could lead to an earlier resolution of this matter than anticipated.
The complainant’s legal team did not respond to the Cointelegraph investigation.