Plaintiffs’ attorneys discover a new tool in New York City biometrics law

Plaintiffs have filed two putative class action complaints in 2023, alleging violations of New York City’s relatively new biometric information privacy law, signaling a new potential avenue for class action plaintiffs’ lawyer to seek statutory damages from companies that collect, use, or store biometric information of their customers, consumers, and members of the general public. Given the law’s provision for recovery of $500 to $5,000 per violation, combined with potentially enormous classes, it is imperative that companies take efforts to comply with its requirements.

As we noted in a prior article, enacted in 2021, NYC Admin. Code §§ 22-1201–1205 (the NYC Biometrics Law) requires covered commercial establishments that collect, store, convert, retain, or share customers’ biometric identifier information to disclose the practice in “plain [and] simple language” on “clear and conspicuous” signage near establishment entrances. The law also prohibits such establishments from selling, leasing, or otherwise profiting from consumers’ biometric information. And, as noted, it provides the right to customers aggrieved by violations of the foregoing provisions to sue for statutory damages ranging from $500 to $5,000 per violation.

Almost two years after its enactment, plaintiffs have only now begun to pursue recovery of these damages through the courts. In the second lawsuit of its kind, against the same company, a recently filed putative class action alleges that a large e-commerce company failed to properly notify customers that it used biometric identification technology in its cashier-less convenience stores across New York City. To enable the cashier-less shopping experience, the convenience stores rely on palm-scanning and sensor technology that use a customer’s body shape and size to track that customer’s movements to determine the products purchased while in the store.

According to the complaint, the e-commerce company operated these stores without any of the required signage until March 2023. The plaintiff further alleges that the signs ultimately posted are misleading and confusing because they state that the store will not collect biometric data unless the customer enrolls in the optional palm-scanning service, even though the store does collect and analyze the body size and shape of each customer that walks through the door. Purportedly, the signs are placed too far from the entrance and do not satisfy NYC Biometrics Law’s “clear and conspicuous” requirement, apparently because the signs do not look like the NYC government-provided template.

Should the lawsuit proceed, it may help clarify what signage meets the “clear and conspicuous” standard. The NYC Biometrics Law provides a broad and non-exhaustive list of protected biometric identifier information, so a ruling might also provide clarity on whether the customers’ body size and shape will meet the definition. As noted, this lawsuit is the second against the same company. The first lawsuit similarly alleged the company failed to post the proper notice that biometric information would be collected via use of palm-scanning technology.

Class actions brought under comparable biometrics laws (most notably the Illinois Biometric Information Privacy Act) have led to extraordinary settlements and verdicts, sometimes reaching into the tens or even hundreds of millions of dollars. It remains to be seen whether the NYC Biometrics Law will be the vehicle behind a similar surge of privacy class actions. Nonetheless, there is no reason to wait and see, and companies subject to the NYC Biometrics Law should familiarize themselves with the law and take efforts to comply with its requirements.

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If you have any questions about this Legal Alert, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.