TORONTO — TD Bank Group's U.S. subsidiary has filed a lawsuit against Plaid Inc., accusing the San Francisco-based data aggregator of unlawfully using its logo to trick users into handing over personal data that can later be monetized.
In filings made through a New Jersey court on Wednesday, the bank says Plaid created a user interface for financial services applications that infringes on the bank's trademarks, logos and green colour scheme.
The bank said in the court filings that the interface "dupes" consumers into believing they are entering personal information into TD Bank's trusted platform.
"In reality, however, consumers are unwittingly giving their login credentials to the defendant, who takes the information, stores it on its servers, and uses it to mine consumers’ bank records for valuable data (e.g., transaction histories, loans, etc.), which the defendant monetizes by selling to third parties," TD claimed in the court records.
The bank called the sale of data "unscrupulous" and an invasion of privacy committed by Plaid, which offers software that allows developers to interact with banks and credit cards.
Plaid did not immediately respond to a request from The Canadian Press for comment. The claims made in the filings have not been proven in court.
The bank indicated in court records and a release that it took legal action against Plaid because it had attempted to work through the issues on multiple occasions to no avail.
"Plaid's intentional, unauthorized use of TD's name, trademarks and logos is deceptive," Greg Braca, president and chief executive of TD Bank's U.S. subsidiary, said in a release.
"By mimicking TD's login screen, Plaid creates the false impression that consumers are engaging directly with TD Bank or entering their banking credentials into TD's secure digital and mobile app platforms or a platform authorized by TD, when that is not the case."
TD seeks a court order for Plaid to end its unauthorized use of TD's name, trademarks and logos when providing its services and wants Plaid to hand all profits arising from use of the logos and trademarks to the bank.
It is also seeking an order requiring Plaid to pay statutory damages up to $2 million for each type of service sold, offered for sale or distributed by Plaid under the bank's trademarks and wants a to-be-determined payment exceeding $75,000 for damages caused by the acts.
Plaid and Visa Inc., which earlier this year announced it would purchase Plaid for US$5.3 billion, have faced a series of U.S. class action lawsuits accusing the company of selling information obtained through log-ins to millions of customer accounts without disclosing the practice.
Visa refused to comment and asked for all queries on the matter to be redirected to Plaid.
Plaid was founded in 2012 by Zach Perret and William Hockey and quickly racked up millions in venture capital after being used by popular financial businesses including Venmo, Coinbase, Square and Stripe.
This report by The Canadian Press was first published October 14, 2020.
Companies in this story: (TSX:TD)
Tara Deschamps, The Canadian Press