[akarma]

I actually mentioned in a thread about Plaid in 2018 that they sold transaction history to third parties, and the cofounder came onto HN to explicitly deny that [1]. I actually felt convinced they didn't afterwards, as I couldn't imagine such a direct and clear refutation if it were true.

[1] https://news.ycombinator.com/item?id=18655417

[jeandenis]

Hey, CTO from Plaid here. We don’t, and have not, sold data.

https://plaid.com/legal/#consumer-support

As someone who has overseen our consumer privacy team over the past few years building out products like Plaid Link and Plaid Portal, I can attest this is a foremost priority for the company. FWIIW, I don’t agree with the allegations, and you can read our POV on this blog post.

https://plaid.com/blog/plaids-commitment-to-consumer-privacy...

[RileyJames]

Based on this, and the blog post, they clearly take issue with the term ‘sold’. Making the users data accessible via api to customers who’ve paid for access to said data does not constitute ‘being sold’, as far as their lawyers are concerned. The fact that 98 million users disagree is unfortunate...

The product was sold as infrastructure, and used as data collection, and 98 million users were not aware of that.

If you’re unable to reconcile why users of square cash would be confused when they hear their data is accessible through some service called ‘plaid’ for which they’ve never signed up, or given their data, then maybe you could start with defining terms as they would, rather than how you’d prefer they sound.

Having data in a database doesn’t make it yours, it’s the users. It was when it was in their bank, it is when you move it to your service and it remains when you provide it to someone else.

[jeandenis]

I replied in a few other threads on this. We don't make the user's data accessible via API outside of the app the user connected. Your personal data is not sold or rented or given away or bartered to parties that are not Plaid, your bank, or the connected app.

We talk about all of this in our privacy policy, including ways that data could be used — for example, with data processors/service providers (like AWS which hosts our services) for the purposes of running Plaid’s services or for a user’s connected app to provide their services.

Here's the policy if you want to look: https://plaid.com/legal/#consumers

[neolog]

I don't think the policy helps much. For example,

> We share your End User Information for a number of business purposes:

> - With the developer of the application you are using and as directed by that developer (such as with another third party if directed by you);

> - With our data processors and other service providers, partners, or contractors in connection with the services they perform for us or developers;

This is so vague that I don't know what it's even supposed to mean. What Plaid lawyers will argue it means when pressed is a further question.

[jjulius]

>What Plaid lawyers will argue it means when pressed is a further question.

And thanks to Plaid settling, their lawyers won't be pressed.

[akarma]

Thank you for the response — I know you're likely very restricted in what you can say here, but:

You just settled a claim that you sold customer transaction histories, and from the article linked, the plaintiffs' lawyers claim that you have agreed to implement meaningful business practice changes to remediate these issues.

(1) If you've never sold transaction histories, why settle a lawsuit alleging that you sold transaction histories?

(2) What meaningful business practice changes could you be making if there's no issue to begin with?

(I'm relying on the article here as a source of truth).

[jeandenis]

You’re right that I can’t write much (legal, PR team say hello).

The bottom line point is, we don’t sell data and that’s not the main allegation. The main allegation is that people didn’t understand that we were part of the flow of connecting banks to apps. We disagree.

Before 2017, there was a whitelabel experience of Plaid that didn’t say “Plaid”, didn’t have the Plaid logo, etc. We still stand by our belief that our disclosures at the time were more than adequate. But it’s not something we want to have protracted litigation around.

The reality is that our experience today is vastly different (and has been for a while). As for “what meaningful business practice changes could you be making if there's no issue to begin with.” Like most companies, we’re always making improvements to our experience -- today we have a consent pane that makes our role clear, a portal for people to manage their data, etc.

[akarma]

> Plaid would retain access to their credentials and use them to mine, aggregate and then sell users’ financial transaction data to third parties (including to the fintech apps that use its services) for purposes unrelated to the plaintiffs’ use of the fintech payment apps. [1]

This is allegedly from the lawsuit. I can see your perspective — that it made sense to settle because of the privacy accusation, but you still deny the other accusations. I understand that perspective, though as I'm sure you can understand, it's hard to know for sure based on the allegations and the settlement.

[1] https://newmedialaw.proskauer.com/2021/05/11/plaid-federal-e...

[adrr]

Risk scores for this product.

https://plaid.com/signal/

[thallium205]

Pre-2017 Plaid was awesome. You were able to just feed in a username and password of a bank account you collected with your own UI and it would spit out its transactions.

[archenary]

IANAL and have no affiliations to Plaid. My takeaway from the article and [0] is that Plaid violated privacy laws because they provided insufficient disclosure with respect to the collected data, not that they are selling data to third parties.

Edit: Update [0] to source

[0] https://newmedialaw.proskauer.com/2021/05/11/plaid-federal-e...

[akarma]

(IANAL either) I understand and agree that part of the issue is that they, allegedly, underhandedly collected this data. My question is focused around the potential selling of that data, which took place according to the lawsuit and was likely the reason to collect the data.

From the article you linked:

> Plaid would retain access to their credentials and use them to mine, aggregate and then sell users’ financial transaction data to third parties (including to the fintech apps that use its services) for purposes unrelated to the plaintiffs’ use of the fintech payment apps.

[madamelic]

> My question is focused around the potential selling of that data, which took place according to the lawsuit and was likely the reason to collect the data.

They would kind of have to be idiots to do so, to be quite frank.

Up until like a year ago, their baseline product was $500 / mo plus $x / user after 100 users (iirc) with a 12 month contract.

Plaid has basically no competition, is worth billions and was almost acquired if not for an anti-trust suit.

I am not sure how Plaid or its founders would benefit financially by betraying the trust of their customers and their customers' customers by getting a few cents per record out of it.

> Plaid would retain access to their credentials and use them to mine, aggregate and then sell users’ financial transaction data to third parties (including to the fintech apps that use its services) for purposes unrelated to the plaintiffs’ use of the fintech payment apps.

People's hatred / mistrust of Plaid stems for a misunderstanding of what Plaid is.

Yes, Plaid does """sell""" that information... to the app that you willfully gave permission to, information like cash flow, debt, types of debt, etc.

Oh, also, if people are so terrified of Plaid, they should write to the Congresspeople and ask them to write a bill to force banks to write & provide REST APIs. The lack of banking APIs is the only reason Plaid exists and has to resort to scraping or storing banking information.

[tzs]

> Oh, also, if people are so terrified of Plaid, they should write to the Congresspeople and ask them to write a bill to force banks to write & provide REST APIs.

Why REST? Yes, I’d certainly rather call rest APIs than, say SOAP APIs, but do really want Congress specifying that much technical detail?

[geoduck14]

I haven't used Plaid and I haven't read the litigation, but it seems the following scenario may have happened:

1) Users use Plaid to buy/sell with a variety of vendors and banks 2) Vendors and banks were aware that specific users were buying /selling because they were buying/selling their products 3) Users consented to #2 because they were buying/selling their products

4) Plaid provided aggregated reports that said "5% of your customers also shopped on Amazon"

People sued over #4

[wheaties]

I don't have the time to read and research exactly what happened. I see you settled for a large sum. Thus, I don't believe you. We've all been burned by companies that claim one thing and do the exact opposite. It doesn't matter if legally they are stating things accurately. What matters is how we, a mere human, would believe the plain English phrases used to be construed.

Hope you have success and I have no ill will towards you.

[briffle]

Yep, its right up there on the 'corporate-speak' next to "we're taking these alegations very seriously"

[jeandenis]

I understand your point (and yes we are all mere humans who like plain language).

Your data goes from your bank to the app that you authorized, via Plaid. It is not sold to anybody.

[adrr]

Did you pull all transactions on plaid auth requests? Did you store that data to build out your risk score product? You’re standard customer(one verifying their account for an ACH pull) more than likely didn’t know all their transactions were being stored and mined. They just wanted to fund their robinhood account. That is the issue.

[sroussey]

Derived data? All that aggregated stuff? Nothing?

[oh_sigh]

Not to be nit-picky, but is that data(or derivatives of the data) gifted, given, bartered for, or otherwise sent to parties that are not (plaid, user bank, connected app)?

Neither here nor there, but I just used Plaid for the first time yesterday to pay for the downpayment on my Tesla. It was a really nice, seamless experience.

[infogulch]

I would also like to see the (notably, very carefully followed) 'data is not sold' line strengthened to include all other forms of transmission.

Also a happy user of a service enabled by plaid tech.

[jeandenis]

I replied in some other thread. Copy-pasta:

No, your personal data is not sold or rented or given away or bartered to parties that are not Plaid, your bank, or the connected app. We talk about all of this in our privacy policy, including ways that data could be used — for example, with data processors/service providers (like AWS which hosts our services) for the purposes of running Plaid’s services or for a user’s connected app to provide their services.

[Gimpei]

I worked at Plaid from when it was less than 50 people to when it was a little over 100. There was no selling of data going on when I was there in any form (anonymized, aggregated, or otherwise). More generally, it doesn't make sense for Plaid to sell data. They already make a huge amount of money on the API. Why jeopardize that? In terms of the settlement size, it actually seems like peanuts to me in comparison to the size of Plaid and the number of affected people. I mean it basically translates into 60 cents a person. This seems more like a payoff to the class action lawyers, enough to make it worth their while but basically nothing for their "clients."

[geoduck14]

Just because you settle, doesn't mean you are guilty.

[hellbannedguy]

I get it. It's just 58 million. I would fight.

[newfonewhodis]

No company would settle for such a large sum unless they were guilty or afraid of going through discovery.

[jsonne]

That's just not at all true. If you've ever worked in / around law you'd understand how it's less about right and wrong and more about risk management. Non guilty parties settle all the time. (I have no idea if that is true in this case or not) but simply the idea that they settled for $$$ amount means they're guilty is just false.

[kodah]

As an engineer that's had to advise corporate legal on how to look at various things I can assure you that most of it is just risk mitigation and reward. From lawsuits to contracts, it's all the same stuff. That's just how legal people think. I don't think it goes any deeper than that.

[HeyLaughingBoy]

How much did they settle for? I don't see that in the article. Just because they were sued for $58M doesn't mean that the settlement amount was anywhere near that!

[themacguffinman]

A legal settlement over a lawsuit is the epitome of "if legally they are stating things accurately", how can you possibly conclude that their settlement relates to how you, a mere human, believe the English phrases to be constructed. One explanation is dismissed because it touches on supposedly irrelevant legal details yet your belief is based entirely on another legal detail. It sounds like you've made up your mind already regardless of what the "plain English" circumstances could be.

[OnlineGladiator]

This really sounds like you're just doubling down without really responding to anything directly. You say you disagree with the allegations - why do you disagree with them? I understand you probably can't speak to this for legal reasons, but this vague rebuttal is worse than saying nothing at all. It just sounds like typical corporate PR, which makes me automatically assume you're lying.

I don't know the details of this case so I have no strong opinions, but this response makes me trust you less, not more.

[jeandenis]

I wrote a comment above on the main allegation which hopefully answers your question. It's not about selling data.

[mikeiz404]

I’m guessing this is the relevant section stating that summarized anonymized data is shared.

We may collect, use, and share End User Information in an aggregated, de-identified, or anonymized manner (that does not identify you personally) for any purpose permitted under applicable law. This includes creating or using aggregated, de-identified, or anonymized data based on the collected information to develop new services and to facilitate research.

We do not sell or rent personal information that we collect.

[geoduck14]

I'm betting you are right. It may be that they sold aggregated data, and that they aggregated based on factors that might have been too granular in some situations.

Perhaps something like "all users who are in the UK and logged in last Sunday morning". Something like that could have been a pain to sess out for each instance of data sharing, in addition, if you "settle in court", you can also set court-approved definitions of what "anonymously aggregated" means.

[jjulius]

>We do not... rent personal information that we collect.

Forgive my ignorance here, but how exactly would one "rent" personal information?

[sodality2]

Sell a subscription to access current transactional data. Like if Verizon charged $x/mo to have access to call logs, and was sold to advertisers

[lancesells]

Access through something like an API and then losing access once you stop paying your monthly fee?

[phyzome]

Facebook claimed repeatedly that they had never sold user data, and it turns out this was true: Instead, they had bartered user data for increased access or other privileges elsewhere.

I'd like to hear a broader statement on the specific phrasing in this article: « the fintech firm passed on personal banking data to third party firms without user consent ».

[jeandenis]

No, your personal data is not sold or rented or given away or bartered to parties that are not Plaid, your bank, or the connected app. We talk about all of this in our privacy policy, including ways that data could be used — for example, with data processors/service providers (like AWS which hosts our services) for the purposes of running Plaid’s services or for a user’s connected app to provide their services.

[chuckcode]

I see a lot of suspicion in thread below, which I very much understand.

I'd like to take a minute though to express my frustration with the banks that refuse to supply any sort of limited APIs. How is it 2021 and I still can't give my tax person read only access to a specific year of transactions? Plaid and others trust issue would be so much easier if the banks had any sort of control over sharing aside from none or authorized to do anything.

[geoduck14]

Your banks would need to create APIs with fine grained access to do the things you describe.

Go ahead and explain to a bank who has a STAGE COACH in their logo what an API is and why they need one with fine grained access.

[stefan_]

The old overly specific denial. Never did sell the data, but collected and stored it just in case you ever changed your mind about that.

[lmilcin]

I don't understand something. Please, help me understand:

"According to the lawsuit, filed Thursday in California federal court, the plaintiffs alleged that Plaid has “exploited its position as middleman” to obtain app users’ banking login credentials and use that information to gain access to and sell their transaction histories. Allegedly, these actions occurred without users knowing about Plaid’s role is a variance of “deceptive tactics.”"

So, the lawsuit is for selling the transaction histories and you say you never did it.

Why do you settle for $58M if you never did it rather than go to court so that they present proofs that, according to your explanation, must be false?

I am not convinced.

Or, the simpler explanation you just lie here to us because you can. But you settle to not go to court because you know you can't lie yourself out of loosing.

[madamelic]

Here's my dumb explanation:

Ever seen Fight Club and that recall equation?

Yeah, that's why. It would cost them more time, bad PR and money to fight than it would be to just settle and take the lumps even if it is untrue.

[lmilcin]

$58M?

In this case, you ask to dismiss the case for lack of evidence. That is, if you are innocent and there really is no evidence.

[scottydelta]

While I have you here, as a developer of a financial product myself and wanting to use something to let my users connect their bank accounts to my product via plaid, let me tell you sir that your pricing strategy sucks. There is no way for a developer to pay for plaid use on per user basis and your service cannot be used without having to pay like minimum $500 to you every month even if I have like 10 users. So basically your pricing is hostile towards startups.

[phoenixy1]

Sorry you got hit by that! I work at Plaid -- most of Plaid's APIs can be used without a $500 monthly minimum contract but a few of them do require it -- we know this is a pain point and are currently looking into how can make pricing on these products friendlier to small developers.

[squeaky-clean]

So... does anyone here actually believe this comment?

[mdoms]

Hmmmm could have saved yourself a cool $58 million if what you're saying is true.

[rimeice]

Do you sell anonymous transaction data?

[didntknowya]

i don't get why you'd settle then. is this just denying it on technicalities?

[tartoran]

So the cofounder was not telling the truth then?

[collectedparts]

The cofounder was telling the truth (or, at least, nothing in the lawsuit implies that he was not).

The plaintiffs in this case are claiming that when they linked their bank accounts to PayPal/Venmo/etc using Plaid they didn't realize what they were doing, or that it's somehow unfair that Paypal/Venmo/etc got their banking data (despite knowingly inputting their credentials into Paypal/Venmo/etc).

Paypal/Venmo/etc is not a third party in that case. They're the party that the customer was knowingly interacting with.

A third party would be an unknown / unrelated data broker. Ie, the cofounder is claiming that they don't turn around and resell data to anyone other than the app that the customer was deliberately using.

[majormajor]

The "using Plaid" part of what you're saying confuses me. My reading is that the plaintiffs are claiming that they signed up for Paypal or Venmo directly, linked their banks account, and were unaware that behind the scenes this meant their data went to Plaid, and that then Plaid both gathered data from this and sold the data.

If that's accurate - if the plaintiffs were just trying to use Paypal + their bank account, and only coincidentally using Plaid because Paypal used Plaid - then any data being captured and stored by Plaid does sound extremely fishy. I'd want them to just be a bridge to let info flow between the bank and Paypal, not store any of that themselves too. That part seems sketchy even if they never sold it - I still don't think they should keep it in the first place.

[ahzhou]

Check the source material. Here's the suit: https://www.classaction.org/media/cottle-et-al-v-plaid-inc.p....

The relevant section is on pg 16, under the heading "Plaid Sells and Otherwise Exploits the Unlawfully-Obtained Private Data".

The suit alleges that "Plaid has admitted that it routinely sells the consumer banking data it collects. At a minimum, Plaid sells the data it obtains from consumers’ accounts back to the very app providers, including the Participating Apps, who use its services. [40] Plaid calibrates its prices based on the type of information being sold. [41]".

Footnotes 40 and 41 are, respectively:

[40] See Feb. 21, 2017 Response by Plaid to CFPB’s RFI, https://plaid.com/documents/PlaidConsumer-Data-Access-RFI-Te... (Plaid acknowledges to CFPB that it sells data to party “permissioned” by consumer).

[41] See Feb. 2019 interview with Zach Perret, https://www.saastr.com/build-a-platformecosystem/.

-----

IANAL. The suit alleges that Plaid sells the data, with the specific proof that Plaid sells data to the authorized app (Paypal or Venmo in your example above). The plaintiffs do provide proof in the suit that Plaid sells the data to third parties, but suggest that Plaid might, since they already sell the data to the app that users authorized.

At risk of misrepresenting their argument, the suit seems to claim that Plaid doesn't do enough to give consumers (think average non-tech savvy person) enough of a heads up on what's happening behind the scenes. According to the suit, a consumer using Plaid doesn't understand that they give banking credentials to a third party (Plaid), which uses the credentials and "sells" data to the app that is being connected to the bank.

The above seems consistent to what the Plaid CTO wrote. I haven't seen anything that indicates Plaid sells your data to unrelated third parties. That said, I agree with the suit - Plaid should do a better job of making it clear exactly how your banking information is going to be used.

[owenversteeg]

So, in other words, they're selling my data, just not to third parties. So when I go to click "connect to Plaid", now whoever I'm connecting to suddenly has every single transaction from my bank/credit card/whatever I just connected.

So still a privacy nightmare, just a slightly different one.

What's so hard about not selling my data at all, and not collecting any data except for what's absolutely necessary to connect A to B?

[nemothekid]

>then any data being captured and stored by Plaid does sound extremely fishy

I've integrated with Plaid's API (a long time ago), and this doesn't sound fishy. Plaid's API is pretty comprehensive and it would have PayPal's job to unlink the connection after the verification took place. Plaid gives you a "token" representing the user that can be used to further look up information in their account - such as new transactions. If PayPal had naively enabled the usage of those APIs, then it's not surprising Plaid stored that data.

For example, if you (the API client) didn't want to store any information except for a user token (similar how you might store tokens with Stripe's API), then every time you needed to lookup the client's account number you would call Plaid's API to retrieve that data (which, by definition, they would be storing).

[majormajor]

As a customer, though, that still sounds very dismaying to me.

If I'm linking my bank to paypal to send money back and forth, I don't want: (a) paypal getting transaction history, (b) a third party company hanging on to those credentials, (c) that third party company getting any view of transactions either. I just want Paypal to send/retrieve money.

I thought Plaid just translated "different bank acount APIs" to a dev-friendly one. If they're using that to collect a lot of data THEMSELVES from customers who just wanted bank interop... that's bad. Nobody "using" Plaid is intended to give this intermediary company all that info.

I'm linking my account to Paypal because I (thought that) I trusted Paypal. I never knew I was actually giving all this shit to this other company too.

(In my case, I've used routing number/checking number because they seemed to require handing over less privileges than my full password, and this certainly seems to reinforce my skepticism about using the "sign in to your bank" password auth for linkage.)

[nemothekid]

>If I'm linking my bank to paypal to send money back and forth, I don't want: (a) paypal getting transaction history, (b) a third party company hanging on to those credentials, (c) that third party company getting any view of transactions either. I just want Paypal to send/retrieve money.

100%, which is why I think this lawsuit is valid. That said, even though I don't believe Plaid sold any data, a lot of people brought this up as a concern to using Plaid. I don't consider it shady behavior, because I don't think Plaid ever misrepresented their capabilities to their clients. In other words, PayPal knew Plaid would be storing this data, and used their reputation to provide legitimacy to Plaid. In my opinion, it was PayPal who was irresponsible with your data.

[akarma]

The link mentions third party firms:

> Plaid has settled a $58 million class action lawsuit over claims that the fintech firm passed on personal banking data to third party firms without user consent.

and selling transaction histories:

> the plaintiffs alleged that Plaid has “exploited its position as middleman” to obtain app users’ banking login credentials and use that information to gain access to and sell their transaction histories.

For what it's worth I haven't read the actual lawsuit yet, but would love a link if it refutes the article.

[ahzhou]

Here's the actual suit. https://www.classaction.org/media/cottle-et-al-v-plaid-inc.p....

I wrote a post above on my take but TL;DR - I think that the suit is mostly alleging that Plaid doesn't do enough disclosure of what's happening behind the scenes. It suggests that Plaid might sell the data to unrelated third parties, but doesn't support it with any proof. It does support itself with proof that Plaid "sells" data to the app that is being connected to the bank.

[edoceo]

Correct.

[Justin_K]

Unreal... straight up lies and fraud if you ask me.

[newfonewhodis]

Wow what a jerk. Very, very explicit lie:

> Plaid used consumers’ banking login credentials to gather and distribute detailed financial data without prior consent

> Allegedly, these actions occurred without users knowing about Plaid’s role is a variance of “deceptive tactics.”

And for all this:

> If all 98 million people were to file a claim, each would receive just 60 cents.

> The San-Francisco based platform raised a $425 million funding round in April

The current capitalistic system is broken beyond repair. We need stricter corporate regulation (especially in fintech but more broadly) very urgently.

[cowpig]

dude you can't just drop a hard R like that on HN

[NicoJuicy]

Let's see if @whockey has the balls to come explain him.

But, we're not in Japan. So i doubt he will.