Lemonade hit with class action alleging privacy violations
The suit claims the insurer collects and stores clients' retina scans, voice prints, and face scans without their knowledge or consent.
The artificial intelligence-powered technology Lemonade has touted as being a gamechanger for the insurance industry is putting the internet insurer in hot water once again.
On August 20, Lemonade was hit with a privacy class action lawsuit (Pruden v. Lemonade, Inc., et al.) in the New York Southern District Court over its alleged collection and use of biometric data. The suit claims that Lemonade collects and stores customers’ retina scans, voice prints, and face scans without their knowledge or consent when they upload videos during the claim submission process. During this process, Lemonade’s AI chatbot analyzes the submitted videos for fraud to “pick up non-verbal cues that traditional insurers can’t.”
That practice was revealed in May 2021 when the insurer faced public uproar over its use of AI and the possibility of discrimination based on race and other traits because of biases introduced by the people who program and implement it. In a statement at the time, Lemonade assured consumers that its facial recognition technology is used to flag claims submitted by the same person under different identities and that claimants are not “treated differently based on their appearance, behavior, or any personal/physical characteristic.”
However, that admission opened the gate for privacy violation claims, as cited in the new lawsuit. ”Lemonade readily admits that it is critically dependent on its ability to collect consumer data, which Lemonade uses to train its AI and create algorithms allowing Lemonade to predict and monetize consumer behavior,” the complaint notes.
The suit also claims that the company “expressly and impliedly assured” clients that it would not collect, require, sell or share biometric data. “The unsuspecting consumers, including plaintiff and the class members, fell for these promises in relying on Lemonade’s guarantees to their detriment,” adds the complaint.
Lemonade did not return a request for comment.
Biometric data has been the center of controversy over privacy concerns and risks associated with misuse and theft. According to the Lemonade suit, surveys show that consumers are more sensitive about biometric data than other categories of personal information, with less than 10% of consumers willingly give up their biometrics in exchange for shopping for online products and services in 2018.
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