Nationwide Mutual Insurance CIPA Lawsuit

A CIPA lawsuit was recently filed against Nationwide Mutual Insurance for illegal wiretapping and invasion of privacy, and now a federal judge in California has ruled that the case can proceed to trial. The U.S. District Court judge issued the ruling in response to a motion to dismiss the wiretapping claims under Section 631 of CIPA, or the California Invasion of Privacy Act. The civil suit alleges that Nationwide Mutual unlawfully allows a third party to eavesdrop on customer conversations on the insurance company’s website. Chat communications are allegedly monitored in real time, and the sensitive personal data from those conversations is allegedly stored and used for financial gain. These actions would constitute clear violations of California consumer privacy laws.

These days, it is common for many different types of businesses to violate the CIPA and other invasion of privacy laws. If you live in California and used the chat feature on a company’s website, you may be eligible to join a class action lawsuit for invasion of privacy. The Los Angeles consumer protection lawyers at Tauler Smith LLP can help you get financial compensation.

Nationwide Mutual Insurance Sued for Invasion of Privacy

The defendant in the recent invasion of privacy case is Nationwide Mutual Insurance Co., which is a corporation that offers insurance, retirement, investing, and other financial services and products to consumers in the United States, including residents of California. Nationwide operates a website: www.nationwide.com. The website has a chat feature, which customers can use to have online conversations with Nationwide. Sometimes, the customers who use the chat feature may share sensitive personal data with the company.

Third-Party Wiretapping of Customer Conversations

Nationwide Mutual Insurance has been accused of using a third-party company, Akamai or Kustomer, to embed code into the Nationwide website, which allows the third-party company to monitor and store transcripts of the conversations that occur through the chat feature. Akamai specializes in harvesting data from consumer conversations, which is believed to be the reason that Nationwide contracted with them in the first place.

Significantly, Nationwide does not inform customers who use the chat feature on the website that monitoring of conversations, storing of transcripts, or data harvesting occurs. Beyond that, Nationwide does not obtain customers’ consent for any of these activities.

Federal Judge Denies Motion to Dismiss Wiretapping Lawsuit Against Nationwide Mutual Insurance

The plaintiff in the consumer data privacy case is a California resident who used a smartphone to visit the Nationwide Mutual Insurance website and to communicate with Nationwide via the company’s website chat program. She filed her original legal complaint in Los Angeles County Superior Court, and the case was later removed to the U.S. District Court for the Central District of California.

Once the case arrived in federal court, Nationwide filed a motion to dismiss the complaint. The U.S. District Court recently held a hearing on the motion to dismiss. Although the Section 632.7 CIPA complaint was dismissed, the court ruled that the Section 631 CIPA complaint could move forward to trial. The court found that the plaintiff had stated a valid claim under § 631 of the CIPA because she plausibly alleged that Nationwide aided third-party Akamai in violating the consumer privacy statute.

What Are California’s Data Privacy Laws?

On top of having extremely strong consumer protection laws, California also has some of the strongest digital privacy laws in the country. The three most prominent statutes are the California Invasion of Privacy Act (CIPA), the California Consumer Privacy Act (CCPA), and the California Privacy Rights Act (CPRA). All of these data protection laws impose civil liability on companies that invade the privacy of customers. The CIPA imposes a requirement on businesses to obtain permission from customers before recording telephone and internet communications, including online chat conversations. The CCPA specifically prohibits businesses from sharing the personal information of customers with third parties, while the CPRA amended the law to increase the penalties for violating consumer privacy.

What Conduct Is Prohibited by the California Invasion of Privacy Act?

Although Section 631 of the California Invasion of Privacy Act (CIPA) is technically a criminal statute with criminal penalties, the Penal Code authorizes civil liability for violations of the law. This means that consumers whose confidentiality was invaded by a company doing business in California can potentially bring a civil lawsuit for monetary damages.

California courts ruling on CIPA claims have interpreted Section 631 to prohibit three types of conduct:

Intentional wiretapping.
Attempting to learn the contents of a communication in transit over a wire.
Attempting to use information obtained as a result of wiretapping or monitoring of communications.

Additional requirements or elements of a CIPA violation include that the intentional wiretapping was done while the communication was in transit and that the communication was being sent from or received at a location within California. The prohibited conduct includes reading the contents of any message, report, or communication without the consent of all parties to that message, report, or communication. If one of the parties did not know that the chat or other type of communication was being monitored and/or wiretapped, then it would not be possible for them to provide consent or authorization. The bottom line is that eavesdropping on a conversation is a clear violation of Section 631 of the CIPA.

“Aiding” a Violation of the CIPA

Section 631 of the California Invasion of Privacy Act (CIPA) also imposes liability on any company that “aids” or assists another in violating the statute. The plaintiff in this case alleges that Nationwide Mutual Insurance “aided, abetted, and even paid third parties to eavesdrop” on her conversations. Moreover, she alleges that these privacy breaches happened not only with her communications, but also with other consumers’ communications on the Nationwide website.

Party Exception to § 631

There is a “party exception” to Section 631 of the CIPA. Courts have found that a party to a conversation cannot be liable for “eavesdropping” on that conversation. But this gets complicated when the conversation involves a third party. For example, if computer code on a website automatically directs a communication to a third party, the party exception won’t shield the third party from civil liability under the CIPA.

U.S. District Court: Nationwide Mutual Insurance May Have Violated California Invasion of Privacy Law

The plaintiff in the Nationwide Mutual Insurance data privacy case alleged that Nationwide violated the California Invasion of Privacy Act (CIPA) pursuant to California Penal Code § 631. Now, the U.S. District Court for the Central District of California has found that the plaintiff plausibly alleged that Akamai read the contents of her messages, which would constitute a violation of Section 631 by Nationwide for “aiding” in the wiretapping offense. Moreover, the court agreed that it is conceivable that Nationwide hired Akamai specifically to intercept messages and use them for Nationwide’s financial benefit. This would constitute “aiding” the illegal wiretapping by Akamai, which would lead to Nationwide itself being liable for violating the CIPA.

One theory put forward in the case is that Nationwide paid Akamai to “embed code” into the website that “enables Akamai to secretly intercept in real time, eavesdrop upon, and store transcripts” of messages sent via the website chat feature. In fact, it has been alleged that Akamai’s business model is to harvest data from transcripts of communications. Significantly, the federal court said that one inference from the plaintiff’s legal claim is that the personal information being harvested goes beyond mere “record information” like the consumer’s name, address, and subscriber number.

Akamai has been accused of intercepting customers’ messages as they are sent and received on the Nationwide website. The court found that these allegations are “plausible” based on Akamai’s public statements about their conduct. Additionally, the court said that the plaintiff clearly alleged that neither Akamai nor Nationwide Mutual Insurance had her consent to harvest personal data from communications on the Nationwide website.

Contact the California Consumer Protection Lawyers at Tauler Smith LLP

Anyone who used the chat feature on a company’s website may have been the victim of illegal wiretapping and privacy violations. If you are a California resident who visited a website, the Tauler Smith LLP legal team can help you. Contact our Los Angeles consumer fraud and false advertising attorneys today. You can call 310-590-3927 or email us.