Texas sues Allstate for using people’s driving data to raise insurance rates

Texas is suing Allstate for collecting and selling people’s location data to justify raising the price of car insurance.

Texas Attorney General Ken Paxton alleges Allstate “unlawfully” collected data through mobile apps, such as Life360, a location-sharing software.

In 2018, Allstate began a partnership with Life360 to connect users with personalized insurance offers. But the lawsuit from Paxton’s office alleges the partnership was part of Allstate’s goal to create “the world’s largest database of driving behavior,” which could drive up car insurance costs for consumers.

“If a consumer requests a car insurance quote or needs to renew their coverage, insurers will have access to that consumer’s driving behavior in the defendants’ database. Insurers then used that consumer’s data to justify raising car insurance premiums, denying them coverage or dropping them from coverage,” Paxton’s office alleges.

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The same data can claim that a user has exhibited “bad” driving behavior, even though he was just a passenger in a car, bus or taxi. In July, New York Times documented how such data can be used to calculate a “driving score” for a consumer, which can determine their insurance rates by exposing them to unexpected tracking.

In the Allstate case, Paxton’s lawsuit alleges that the company and its subsidiary Arity paid various mobile apps, including Fuel Rewards and GasBuddy, millions of dollars to install the company’s tracking software. “Once the defendants’ software was downloaded to the consumer’s device, the defendants could monitor the consumer’s location and movement in real time,” the lawsuit says.

Data collected included altitude, longitude, latitude, bearing, GPS time and phone speed. Apparently, Allstate has also purchased the same data from automakers such as Toyota, Lexus, Mazda, Chrysler, Dodge, Fiat, Jeep, Maserati and Ram.

According to Paxton, the covert data collection also violates the Texas Data Privacy and Security Act, which went into effect last July. It prohibits companies from selling users’ precise location data unless consent is obtained.

“Allstate never provided notice or obtained Texans’ consent to collect or sell their sensitive data,” Paxton’s office added. “This is the first enforcement action ever brought by a State Attorney General to enforce a comprehensive data privacy law.”

Allstate did not immediately respond to a request for comment. But the company’s subsidiary Arity has revealed that it has access to data from over 45 million consumers. Paxton’s lawsuit now asks the court to force Allstate to delete the collected data and pay affected consumers compensation. In August, his office also sued General Motors for selling customers’ private driving data to insurance companies.

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