Credit: BritCats Studio/Adobe Stock California Loan Agency Hit With Proposed Class Action Over Alleged Third-Party AI Data Harvesting
The suit accuses Lendistry of breaching a contractual obligation to protect the beneficiaries' data privacy by deploying AI technologies that harvested class members' business, behavioral and biometric data and transmitted it to third-party companies without adequate disclosures.
October 31, 2024 at 10:13 AM
3 minute read
What You Need to Know
- The California government partnered with loan agency Lendistry in 2023 to compensate businesses and nonprofits affected by the COVID-19 pandemic.
- Lendistry was hit with a class action accusing it of siphoning the beneficiaries' data via AI technologies it used to administer the grants.
- The attorney representing the plaintiffs says that the lawsuit is emblematic of inadequate safety regulations around AI.
Los Angeles-based loan agency B.S.D. Capital, doing business as Lendistry, was slapped with a putative class action on Monday for allegedly siphoning confidential data via third-party artificial intelligence software that it used to administer a statewide grant program.
The complaint, filed Oct. 28 in the California Superior Court for Los Angeles County by the Law Office of J.R. Howell, alleges breach of contract and violations of the California Invasion of Privacy Act and the California Unfair Competition Law, among other claims. Class members include intended beneficiaries of a lending contract established by the California state government and Lendistry to compensate businesses impacted by the COVID-19 pandemic. Counsel has not yet appeared for the defendant.
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