Turning Lemonade Into Lemons (NY)
In a recently filed Southern District of New York case, Mark Pruden v. Lemonade Inc. et al., Lemonade Insurance Agency faces a class action suit over their collection and use of customers’ biometric data without proper authorization. The complaint alleges that Lemonade, despite expressly assuring customers that it would not collect, store, analyze, or otherwise use biometric data, did in fact collect, store, and use customers’ face geometry and non-verbal cues in violation of the plaintiffs’ insurance contracts and New York’s Uniform Deceptive Trade Practices Act.
Lemonade is an insurance company largely driven by artificial intelligence (AI). The first interactions a customer has with the company are with computer programs which intake all the information required to issue an insurance policy, process a claim, or deal with any other potential interaction between the parties. To make a claim, customers are required to submit a video of themselves explaining the incident. This instant case arose as a result of, now-deleted Tweets and company-affiliated blog posts, stating that Lemonade analyzes the videos for signs of fraud and implied that it stored the videos so as to recognize claimants attempting to make multiple claims under fraudulent identities. The complaint alleges this is in express contradiction of Lemonade’s own FAQ’s and Terms of Service, which state that it does not collect biometric information (which is defined to include facial geometry and images).
As the case progresses, it will serve as an interesting case for how data privacy and technology intertwine amidst the very personal world of insurance law.
Thank you to Abby Wilson for her contribution to this post. Please email Colleen Hayes with any questions.