When smartphones secretly create driving profiles

Texas Attorney General Ken Paxton is always at the forefront when it comes to high-profile court cases. With his latest lawsuit, the politician is siding with drivers. “The personal data of millions of Americans was sold to insurance companies without their knowledge or consent.” The accusation: Without adequately informing its customers, the insurance company Allstate tapped into customers’ smartphones and created detailed profiles of their driving behavior in order to offer them tailored car insurance rates. The data was also sold to other insurance companies. Paxton said: “Texans deserve better, and we will hold these companies accountable.”

The deal was already revealed in 2024 through an investigation by the New York Times  : Allstate sells a software module through its subsidiary Arity that app developers can integrate into their programs to create detailed movement profiles. The tracking module was found in an app that promised particularly cheap gas, as well as in an app that families could use to track where their children were, but a weather app also collected detailed location data, according to the report.

consent in the fine print

In a recent statement to the newspaper  , the insurance group stressed that it had complied with all laws and that the affected customers had consented to the data transfer.

The Texas plaintiffs are trying to prove Allstate wrong. In the complaint, they show the consent dialog of the Life360 app, in which only at the very bottom is it stated in tiny print: “In addition, your location data will be used in accordance with our privacy policy and your preferences, which may include sharing with third parties for research purposes, tailored advertising and analytics.” Even if users read privacy statements or tried to object to the data sharing, the plaintiffs believe they would have had no realistic chance of understanding the nature of the data sharing and the consequences for their insurance policies.

The complaint adds new details about how the business with the movement profiles works. According to the complaint, Allstate not only paid millions of dollars to app developers to collect movement data. They were also supposed to report personal data such as names, addresses and device IDs to Allstate so that the company could assign the app owners to the individual insurance policies.

Small discounts for great openness

So-called telematics tariffs also exist in Germany. The prerequisite for potential savings is that customers record their driving behavior themselves using their cell phones or even install a type of tachograph in their car. These boxes can not only log the speed, but also register how hard you accelerate. Emergency braking is also recorded in order to determine how risky a person is driving. However, since the potential savings are not outstanding compared to standard tariffs, the model has hardly caught on across the board.

The plaintiffs in Texas argue that the method Allstate uses to obtain its data is unsuitable for insurance companies. The cell phone cannot detect whether a cell phone owner is driving or sitting in a taxi or bus. As a result, consumers have to pay higher insurance premiums, even if they were not behind the wheel when dangerous driving maneuvers were carried out.

The case is a first for the USA, as there is no nationwide data protection law comparable to the European Union’s General Data Protection Regulation. Only last year did Texas enact a relatively strict data protection law that gives the prosecution authority, i.e. the Attorney General, extensive powers.

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