Texas Sues Allstate For Collecting Driver Data To Raise Premiums (gizmodo.com) 41
An anonymous reader quotes a report from Gizmodo: Texas has sued (PDF) one of the nation's largest car insurance providers alleging that it violated the state's privacy laws by surreptitiously collecting detailed location data on millions of drivers and using that information to justify raising insurance premiums. The state's attorney general, Ken Paxton, said the lawsuit against Allstate and its subsidiary Arity is the first enforcement action ever filed by a state attorney general to enforce a data privacy law. It also follows a deceptive business practice lawsuit he filed against General Motors accusing the car manufacturer of misleading customers by collecting and selling driver data.
In 2015, Allstate developed the Arity Driving Engine software development kit (SDK), a package of code that the company allegedly paid mobile app developers to install in their products in order to collect a variety of sensitive data from consumers' phones. The SDK gathered phone geolocation data, accelerometer, and gyroscopic data, details about where phone owners started and ended their trips, and information about "driving behavior," such as whether phone owners appeared to be speeding or driving while distracted, according to the lawsuit. The apps that installed the SDK included GasBuddy, Fuel Rewards, and Life360, a popular family monitoring app, according to the lawsuit.
Paxton's complaint said that Allstate and Arity used the data collected by its SDK to develop and sell products to other insurers like Drivesight, an algorithmic model that assigned a driving risk score to individuals, and ArityIQ, which allowed other insurers to "[a]ccess actual driving behavior collected from mobile phones and connected vehicles to use at time of quote to more precisely price nearly any driver." Allstate and Arity marketed the products as providing "driver behavior" data but because the information was collected via mobile phones the companies had no way of determining whether the owner was actually driving, according to the lawsuit. "For example, if a person was a passenger in a bus, a taxi, or in a friend's car, and that vehicle's driver sped, hard braked, or made a sharp turn, Defendants would conclude that the passenger, not the actual driver, engaged in 'bad' driving behavior," the suit states. Neither Allstate and Arity nor the app developers properly informed customers in their privacy policies about what data the SDK was collecting or how it would be used, according to the lawsuit. The lawsuit violates Texas' Data Privacy and Security Act (DPSA) and insurance code by failing to address violations within the required 30-day cure period. "In its complaint, filed in federal court, Texas requested that Allstate be ordered to pay a penalty of $7,500 per violation of the state's data privacy law and $10,000 per violation of the state's insurance code, which would likely amount to millions of dollars given the number of consumers allegedly affected," adds the report.
"The lawsuit also asks the court to make Allstate delete all the data it obtained through actions that allegedly violated the privacy law and to make full restitution to customers harmed by the companies' actions."
In 2015, Allstate developed the Arity Driving Engine software development kit (SDK), a package of code that the company allegedly paid mobile app developers to install in their products in order to collect a variety of sensitive data from consumers' phones. The SDK gathered phone geolocation data, accelerometer, and gyroscopic data, details about where phone owners started and ended their trips, and information about "driving behavior," such as whether phone owners appeared to be speeding or driving while distracted, according to the lawsuit. The apps that installed the SDK included GasBuddy, Fuel Rewards, and Life360, a popular family monitoring app, according to the lawsuit.
Paxton's complaint said that Allstate and Arity used the data collected by its SDK to develop and sell products to other insurers like Drivesight, an algorithmic model that assigned a driving risk score to individuals, and ArityIQ, which allowed other insurers to "[a]ccess actual driving behavior collected from mobile phones and connected vehicles to use at time of quote to more precisely price nearly any driver." Allstate and Arity marketed the products as providing "driver behavior" data but because the information was collected via mobile phones the companies had no way of determining whether the owner was actually driving, according to the lawsuit. "For example, if a person was a passenger in a bus, a taxi, or in a friend's car, and that vehicle's driver sped, hard braked, or made a sharp turn, Defendants would conclude that the passenger, not the actual driver, engaged in 'bad' driving behavior," the suit states. Neither Allstate and Arity nor the app developers properly informed customers in their privacy policies about what data the SDK was collecting or how it would be used, according to the lawsuit. The lawsuit violates Texas' Data Privacy and Security Act (DPSA) and insurance code by failing to address violations within the required 30-day cure period. "In its complaint, filed in federal court, Texas requested that Allstate be ordered to pay a penalty of $7,500 per violation of the state's data privacy law and $10,000 per violation of the state's insurance code, which would likely amount to millions of dollars given the number of consumers allegedly affected," adds the report.
"The lawsuit also asks the court to make Allstate delete all the data it obtained through actions that allegedly violated the privacy law and to make full restitution to customers harmed by the companies' actions."
Sometimes the right and corporates aren't buddies (Score:4, Insightful)
Always good to see. Let's hope for a far larger settlement than 'millions'.
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Health Insurance isnt any different, same gag, same ploy, same game.
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My old employer "offered" yearly blood tests. A strictly optional service for your benefit, but if you opt out you are fined a "unhealthy employee" surcharge that is deducted from each paycheck, and it was substantial. You could allegedly submit results from your doctor to avoid the surcharge, but it turns out that was a lie, there was no process for doing that.
But the results were strictly private, right? No, they were shared with insurer and sold into the insurance database, plus they were used by the
Re:Sometimes the right and corporates aren't buddi (Score:5, Insightful)
The only thing that's anti-consumer is if this is done deceptively or the companies do not tell consumers what is affecting their premiums so that they can adjust their own behaviors or make changes that might lower their premiums. Incentivizing people to engage in healthy behaviors is a good thing. If someone wants to smoke that's their business, but why shouldn't they also pay higher premiums corresponding to the greater expectation of future costs? Not doing that is just externalizing the cost of their poor decisions on everyone else and does less to dissuade them from the unhealthy behavior.
I wouldn't have an issue with this in general if the implementation didn't have the problems described in the summary where people could be unfairly punished or rewarded.
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If you think insurance companies are hurting on profit, you either havent been looking at their reports OR you are making dividends off them and have a reason to be disingenuous.
Only if competition isn't working (Score:2, Insightful)
The internet has allowed customers to seek out the best quotes, with the result that, at least on a good day, those profits will be competed away as lower prices for customers.
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HAHAHAHAHAA
Oh, you were serious... Oh my.
Let me guess, trickle down economics works too?
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Insurance companies have a profit margin of about 3% of revenue.
Higher rates don't automatically mean higher profit.
Often, the best way to increase profits is to lower prices, gain market share, and spread overhead costs across more customers.
In California, Geico has the lowest prices and healthy margins.
The same is true in retail. Walmart has the best profit margin of major retailers, the lowest prices, and the highest volume.
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lol, no, you must be an insurance stakeholder to be so misleading. Insurance generally falls into the "market failure" category: although there are thousands of insurance brands out there they are actually only controlled by a few large entities. Druissi and Collins pegged the after-tax profit margins of the top tier insurance entities at rates ranging from 10% to 18%.
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I think we all remember ads such as this one from AllState for their DriveWise app [youtube.com]. That's upfront and they're not getting sued for it.
The issue here is that GasBuddy etc w
Re:Sometimes the right and corporates aren't buddi (Score:4, Informative)
>"That's how insurance companies make a profit though. They find factors that reduce or increase risk to adjust price accordingly.
They can do this now based on number of accidents, claims, tickets, what kind of vehicle, how many miles you drive, where you live, how long you have been a driver, etc. What they have always done. This "new" way is utter speculation by guessing how good or bad a driver you are based on poor, low-resolution data of "braking", "accelerating", and "cornering" with zero context.
The problem I have with the latter is not only can it be extremely unfair, you don't really know what/when/how they are collecting, you can't defend yourself against their conclusions, you don't know who it is being shared with or how. Plus you are punished if you refuse to share your whereabouts with them.
>"I wouldn't have an issue with this in general if the implementation didn't have the problems described in the summary where people could be unfairly punished or rewarded."
But there is no way to implement it without those problems. So that becomes the problem with the whole concept. I can't blame them for trying, but consumers need to stand up against this type of thing. Insurance used to be mostly about risk sharing against extraordinary events. And it has mutated into life-dictating, privacy-invading, nanny crap.
Well, I beat THAT system. (Score:2)
I carry a dumbphone. No apps on it!
Hah! Take THAT Allstate!
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I don't know why Allstate needs to track it. I'm from Kansas and my wife is from Oklahoma, and all of I-35 is just normal people driving reasonable speeds and Texans in large vehicles going 125mph past them. Being from Texas *should* cost you more because even if you're not driving like that, you're on the road with lunatics constantly. Allstate's program is opt-in. You get a discount if you do, so maybe "bribe-in" is more accurate. But if people are opting in, great. That's their choice. If the data is sho
First time for everything (Score:2, Troll)
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There is another shoe to drop, everyone on the planet knows that Ken Paxton would never help the average Texan.
Now do Progressive (Score:2)
Who else is doing this shady crap?
Nuked (Score:2)
Thanks for this.
Immediately nuked Gas Buddy from my devices.
Hell has frozen over (Score:2)
I actually agree with a lawsuit brought by Ken Paxton...
And I still won't enter a GM sales room until Mary Barra backs down from "only GM software on a GM vehicle" spyware initiative. Looks like I'll keep my '16 Frontier until it rusts away.
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A friend of mine said "a broken clock ......"
Texas has privacy laws? (Score:1, Flamebait)
That's the real news here. Keep in mind this is the state that thinks it's okay for complete strangers to be able to sue medical staff for providing an abortion.
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What surprised me is that they need to justify raising premiums. Are they regulated?
No context, bad data, bad conclusions (Score:3)
>"For example, if a person was a passenger in a bus, a taxi, or in a friend's car, and that vehicle's driver sped, hard braked, or made a sharp turn,"
And even if they ARE they driver, this is JUNK DATA without context. Pedestrian jumps out in front of me- hard brake and avoid KILLING him- somehow I am a "bad driver". Idiot beside me doesn't look over shoulder and starts turning into me, I know there is nobody to my left and jerk over a lane and avoid being hit- somehow I am a "bad driver." Someone runs a light coming at me from the side and I am mostly clear, slam on accelerator to avoid being hit- somehow I am a "bad driver."
People who allow these companies to collect this low-resolution data with zero context on them are setting themselves up for discrimination and punishment and without even knowing it. And even if you saw the data a month later, no way to defend yourself from it.
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If pedestrians are jumping in front of you more often than they jump in front of another driver, you're much likelier to file a claim. They don't give a shit how well you do or don't drive, what they care about is whether you will cost them money. They also don't give a shit whether they might be unfairly raising prices on passengers as long as they earn more than they spend on the data collection.
Since I'm not a fan of universal stalking, making stalker data just a bit less valuable is a step in the right
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The Profit Prophets praise Fox Jesus!
isn't this what Tesla Insurance is all about? (Score:2)
Re: isn't this what Tesla Insurance is all about? (Score:2)
And (Score:3)
The CEOs of these companies should be facing jail time as well. Send a real message if you want real results.
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I'd settle for a good, old-fashioned flogging in the town square, with the sentence enforced over two separate events. Let the bastards think about what they've still got coming to them.
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I'd settle for a good, old-fashioned flogging in the town square, with the sentence enforced over two separate events. Let the bastards think about what they've still got coming to them.
Careful. After that CEO got Mangioned, take it as a given the Three Letter Agencies have been instructed to assemble lists of people who make comments like that about the C-suite overlords.