Lemonade accused of illegally collecting consumer data in new trial

New York man seeks class action status for his lawsuit, claiming digital insurer Lemonade illegally collects biometrics from customers.

Mark Pruden of Queens purchased a tenant insurance policy from Lemonade on January 25, 2021. In late May, Pruden filed a claim for a lost piece of jewelry valued at $ 3,500, according to court documents.

The Lemonade model uses artificial intelligence chatbots and Pruden has been connected to an individual named “AI Jim”, who recorded the details of the claim.

“AI Jim asked the plaintiff to sign an undertaking confirming that the information provided is ‘100% true and correct’,” the lawsuit read. “After signing the engagement, AI Jim asked the requester to” record a short video of [Plaintiff] describing the incident. ‘”

Pruden nodded and recorded a 47-second video explaining the details of the lost jewelry. His request was approved 10 days later. But Pruden alleges that the video was used illegally by Lemonade to harvest data.

“The illegally collected biometric data contained personal information, including the applicant’s face geometry and / or voiceprint, and was collected without the applicant’s knowledge or permission,” the lawsuit says.

The lawsuit follows a series of deleted tweets since May in which Lemonade said it was using artificial intelligence to analyze its clients’ claim submission videos for signs of fraud, the journalism site reported. Legal Law360. By picking up “non-verbal clues,” the insurer said in a tweet, it could pick up clues that carriers without a digital claims process would miss.

The insurer has clarified its position after members of the public expressed concern over whether the carrier’s use of AI could be used to deny claims based on race, gender, disability or location. general physical appearance of an insured, noted Law360.

A different insurance company

Founded in 2015, Lemonade Inc. provides home, home, pet and term life insurance in the United States. The company is based in New York City and has around one million clients, according to its annual report with the Securities and Exchange Commission. Seventy percent of its clients are under 35.

Lemonade keeps a flat fee of 25% of a customer’s premium while setting aside the remaining 75% to pay claims and purchase reinsurance, making it less of an incentive to deny claims or make more payments. modest.

The company is registered as a public utility company and has the declared mission of “transforming insurance from a necessary evil into social good”.

On its website and in its marketing materials, Lemonade touts its ability to extract 1,600 data points about a customer by asking just 13 questions, which Lemonade says is a hundred times greater than what other insurers can do, noted the lawsuit.

Pruden is asking the court to certify his lawsuit as a class action suit on behalf of all other customers affected in the same manner. His lawsuit asks the court to order Lemonade to stop data collection and pay unspecified compensatory and other damages.

InsuranceNewsNet editor-in-chief John Hilton has covered business and other events in more than 20 years of daily journalism. John can be reached at [email protected] Follow him on Twitter @INNJohnH.

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