Cryptocurrency wallet operator Zengo appears to have beaten a class action lawsuit accusing the company of wrongly scanning users' IDs under Illinois' biometrics privacy law.
On April 16, Cook County Judge Clare J. Quish dismissed the lawsuit brought by Skokie lawyer Michael L. Fradin on behalf of plaintiff Mike Massel.
Michael Fradin
| lawyer.com
The lawsuit specifically accused Zengo of scanning users' faces without first obtaining express written consent, or without providing notices concerning how the data may be collected, stored, used and ultimately destroyed.
According to the complaint, Zengo similarly requires app users to log in using their stored face scans to authenticate their identity each time they access the app, which contains potentially sensitive financial information.
Zengo was launched in 2018. According to business software and services review site G2, Zengo is considered to be among the most secure cryptocurrency wallets available. The company serves nearly a million customers worldwide.
According to the complaint, Zengo directly targets and markets to Illinois customers and encourages its members to refer others to Zengo in exchange for free bitcoin.
The lawsuits are part of an ever-building wave of thousands of such class actions in courts in Chicago, elsewhere in Illinois and in California and other U.S. jurisdictions under the BIPA law.
While some of the lawsuits have taken aim at tech giants, like Facebook-parent Meta and Google, the bulk of the litigation has targeted employers, who require workers to scan fingerprints when punching the clock to begin and end work shifts, or to access secure systems or areas within a workplace.
However, the lawsuit against Zengo came as part of a growing segment of BIPA lawsuits brought against the operators of popular apps which require users to upload photos of their faces and IDs to verify their identity when signing up and using the sites.
Such lawsuits threaten companies with potentially massive payouts. Under recent Illinois Supreme Court decisions, plaintiffs can demand damages of $1,000-$5,000 per violation, multiplied across thousands or even millions of possible violations dating back five years.
The Illinois Supreme Court notably has interpreted the law to define individual violations as each time a company scans someone's facial geometry, fingerprint or other biometric identifier. When multiplied across potentially thousands of users, damages under such lawsuits could quickly run into the many millions or even billions of dollars.
Some judges have labeled the potential payouts as "astronomical" and unncessarily "annihilative," as to date no BIPA-related claim has ever asserted that the business actually caused any real harm through their biometric scans. Rather, they have claimed the mere technical violation of the law is enough to justify potentially ruinous damages against a business.
Justices on the Illinois Supreme Court have called on lawmakers to reform the law, to reduce the risk of running companies out of business, while unncessarily inflicting harm on Illinois' economy.
According to published reports, the lawsuits have resulted in settlements worth hundreds of millions of dollars in fees to the trial lawyers who brought the lawsuits.
The judge's order dismissing the lawsuit against Zengo does not specify why the case was dismissed. However, the judge ordered Massel's specific claims against Zengo dismissed with prejudice - meaning he is not permitted to try again to sue Zengo under the BIPA law. The judge, though, dismissed the claims on behalf of the potential class of additional plaintiffs without prejudice, apparently indicating different plaintiffs could still try to sue Zengo under BIPA.
The judge directed that each side would need to pay its own legal bills for the resolved case.
In a statement reacting to the dismissal, Zengo CEO Ouriel Ohayon said: “Zengo has always put security and privacy at the center our crypto wallet. Liveness biometrics is a fundamental privacy-preserving technology fit to the highest standards of security. We are proud to have been pioneers on this feature in the blockchain industry and welcome the resolution of this case, which is a testament to our commitment.”
Zengo has been represented by attorney Guy Yonay, of the firm of Pearl Cohen Zedek Latzer Baratz, of New York.
The lawsuit was one of several filed by Fradin in recent months under the Illinois Biometric Information Privacy Act, and one of two filed within days of each other last year by Fradin on Massel's behalf.
In the other BIPA-related lawsuit filed by Fradin and Massel against dating app Zoosk, a judge also ordered the case dismissed in late March under an agreement.