Judge Declines to Dismiss FTC Case Against Kochava; Company Settles Seperate Class-Action Suit
The U.S. District Court of Idaho on Monday denied data broker Kochava's motion to dismiss a case alleging that the broker's data sales are unfair acts or practices likely to cause substantial injury to consumers in violation of Section 5(a) of the FTC Act. Kochava moved to dismiss on the basis that Section 5(a) requires tangible consumer injury and a violation of well-established legal policy, the order said. The court said the "FTC is authorized to seek injunctive relief if it has 'reason to believe' that a business is violating, or is about to violate, a law enforced by the FTC," denying Kochava's motion.
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The ruling arrived days after the company agreed to remediate certain business practices as part of a class action settlement in a separate case. The plaintiffs there alleged that Kochava acquired location data from third parties, letting the company track consumer movements. The settlement doesn't include a monetary penalty.
“Kochava disclosed in the course of settlement discussions that it lacks adequate insurance coverage for the claims asserted in this Action, and that its financial condition both precluded a monetary settlement and virtually guaranteed Kochava would cease to operate if Plaintiffs prevailed,” the Thursday motion said. “Accordingly, the parties have negotiated a Settlement Case Agreement that redresses the conduct underlying Kochava’s alleged privacy violations and ensures that it may not resume the challenged conduct without safeguards as contained herein, while leaving Settlement Class Members’ damages claims unimpaired.”
The motion said the settlement, “reached through arm’s-length, and at times combative, negotiations," requires that Kochava implement safeguards preventing distribution or use of geolocation data from sensitive locations. In addition, Kochava will use best practices for deletion of certain consumer data when consumers opt out of data collection, among other privacy practices.
While Kochava denied possessing location data, it agreed to the preliminary approval of the settlement, which requires it to immediately implement "six significant business practice changes that will ensure the privacy violations at the heart of this action are fully remediated and do not recur," the motion added.