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Title: Texas Challenges Allstate Over Driver Data Usage for Premium Hikes

The legal complaint alleges that the insurance giant, Allstate, engaged in underhanded practices. They're accused of providing financial incentives to app developers, who in turn, installed coded snippets within their applications. These covert snippets were designed to siphon sensitive...

Title: Texas Challenges Allstate Over Driver Data Usage for Premium Hikes

Texas has taken legal action against one of the nation's largest car insurance providers, Allstate, and its subsidiary Arity, alleging that they violated the state's privacy laws by secretly gathering detailed location data from millions of drivers. This data, according to Texas Attorney General Ken Paxton, was used to justify higher insurance premiums.

This lawsuit, the first of its kind by a state attorney general, targets Allstate's use of the Arity Driving Engine software development kit (SDK). The SDK, allegedly paid to be installed in various mobile apps, collected sensitive data such as phone geolocation, accelerometer, gyroscopic data, trip details, and driving behavior information.

Apps like GasBuddy, Fuel Rewards, and Life360, a popular family monitoring app, were among those found to have the SDK installed, according to the lawsuit. Allstate and Arity are accused of failing to inform customers in their privacy policies about what data the SDK was collecting or how it would be used.

The data gathered by the SDK was used to develop products like Drivesight, an algorithmic model assigning a driving risk score, and ArityIQ, allowing insurers to use real-time driving behavior data to more accurately price premiums. However, the lawsuit claims that the companies had no way of verifying whether the data was being collected by the actual driver or a passenger.

In response to the lawsuit, 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, potentially amounting to millions of dollars. The lawsuit also calls for Allstate to delete all unlawfully obtained data and make full restitution to harmed customers.

Allstate and Arity's alleged violations come under the Texas Data Privacy and Security Act, one of several state privacy laws enacted in recent years. While other states have taken action against companies for privacy law violations, Texas's lawsuit against Allstate is significant due to the company's failure to rectify its practices despite having the opportunity to do so.

This legal action by Texas could set a precedent for future privacy law enforcement, potentially forcing tech companies to be more transparent about data collection and usage. If Allstate is found guilty, it might face significant financial penalties, encouraging tech companies to adhere strictly to privacy policies.

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