Court rules customers can sue over Verizon supercookies

A federal appeals court in California ruled on Tuesday that an ad company responsible for so-called “zombie” or “supercookies”—bits of code that tracked the location and browsing habits of Verizon customers—could not dodge a class action lawsuit by invoking arbitration rules in the phone company’s contracts.

The supercookies in question gained notoriety after the website ProPublica discovered the ad company, Turn, and Verizon were using them without consumers’ consent. The cookies collected information about consumers via a unique ID number associated with their device, and would regenerate even if a user tried to delete them.

The episode created a privacy furor and led the FCC to impose a $1.35 million privacy settlement on Verizon in 2016, which required the phone company to obtain “affirmative consent” before it could use such methods to track them.

During this time, Turn deflected a class action suit by Verizon consumers who had accused the ad company of deceptive business practices and trespassing on their devices. This occurred when a judge ruled that Turn, who also supplies data to the likes of Facebook and Google, could invoke the customers’ phone contracts to force them into arbitration—a process that can provide a remedy for an individual consumer but does little to punish a company or change its behavior.

On Tuesday, however, a unanimous three judge panel of the 9th Circuit Court of Appeals rejected that decision, saying Turn could not benefit from the arbitration rules because it was not party to the agreement between Verizon and its customers. As such, Turn may have to face a trial.

The 9th Circuit’s ruling also highlights the importance of location and browsing data, which marketers covet for online ads but can also provide a deeply intimate picture of consumers’ lives.

The value of that data was underscored this week by an announcement by Verizon that it would offer rewards to consumers willing to share their location and web histories for marketing purposes. Under this rewards program, which by a coincidence came the same day as the court ruling, the phone giant is offering perks like Uber rides as well as sports and movie tickets.

Turn, which was required in February by a Singapore telecom giant, did not immediately respond to a request for comment about the ruling.

Source:  Fortune