Court Decisions Regarding BIPA Affect the Financial Industry

Course motion plaintiffs’ firms — spurred on by a important recent growth of out there damages for biometric privateness fits — have begun targeting the economic industry. The Illinois Biometric Facts Privateness Act (BIPA) is the most expansive biometric privateness regulation in the place, and has strict specifications for organizations accumulating, storing or using biometric knowledge (including voiceprints, fingerprints and facial scans). Pursuant to BIPA, plaintiffs’ attorneys have pursued hundreds of class motion lawsuits in latest years against corporations operating in Illinois or collecting Illinois residents’ biometric info. In February 2023, the Illinois Supreme Court docket issued two decisions that ratcheted up available damages by extending the statute of restrictions to 5 yrs and holding that each individual occasion of accumulating or applying biometric details (alternatively than just the initial instance for each individual plaintiff) constitutes a compensable injury.

Until finally a short while ago, fiscal institutions have mainly been able to navigate the explosion of BIPA litigation by way of an express statutory exception supplying that BIPA does not “apply in any fashion to a economical institution nor an affiliate of a economic establishment that is topic to Title V of the federal Gramm-Leach-Bliley Act (GLBA) of 1999 and the policies promulgated thereunder” (the “GLBA Exemption”). 740 ILCS 14/25(c).

Even with the GLBA Exemption, plaintiffs’ attorneys have lately observed traction focusing on the tactics of distributors financial firms use for identification verification (e.g., utilizing facial scans or voiceprints) and arguing that the corporations on their own should also be on the hook for alleged BIPA violations. In Davis v. Jumio Corp., No. 22-CV-00776, 2023 WL 2019048 (N.D. Ill. Feb. 14, 2023), the courtroom rejected a movement to dismiss filed by a vendor offering identification verification for customers of a cryptocurrency trade, keeping in aspect that the seller was not secured by the GLBA Exemption and that the trade, which retained the seller, could also be on the hook for violations.

Plaintiffs’ attorneys’ tactics in Davis and related instances make crystal clear that financial institutions will have to evaluate and fully grasp their practices (and their vendors’ practices) for accumulating, handling, and storing biometric information and facts, as missteps could outcome in major legal responsibility. Further, heading forward, financial companies should negotiate strong indemnity provisions with their biometric sellers, and figure out their oversight obligations concerning vendors’ handling of biometric data.

©2023 Katten Muchin Rosenman LLP
Countrywide Law Assessment, Volume XIII, Range 93

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