Why We-Vibe makers settled multi-million dollar ‘class action’ case

Posted: March 16, 2017

Standard Innovation, the makers of We-Vibe, has written to its partners with detailed information about this month’s much publicised multi-million dollar class action settlement. A class action lawsuit, known as group litigation in the UK, refers to a number of people with the same complaint caused by the same product or action suing the defendant as a group. In the We-Vibe case, Standard Innovation was accused of using its We-Connect app to harvest information about how its customers used its products, including the temperature and intensity settings users chose, without their knowledge.

The suit was filed in the North District of Illinois Eastern Division District Court by two anonymous users in September 2016, and alleged Standard Innovation was in violation of the Federal Wire Tap Act, Intrusion Upon Seclusion, and Unjust Enrichment.

Shortly after the litigation began, the legal teams of both parties met to discuss a settlement. As a result, the parties agreed to resolve the matter through private mediation with Judge Morton Denlow (Ret) of Chicago-based Judicial Arbitration and Mediation Services Inc (JAMS).

Standard Innovation denied every allegation and maintained that it had strong, meritorious defences to the claims, and it was prepared to vigorously defend itself in court. However, it took the view that the uncertainty and risks inherent in any litigation would be protracted, risky, burdensome, and expensive. The plaintiffs acknowledged that Standard Innovation had raised factual and legal defences in the action, and that there was a risk that the class action could ultimately fail, so both parties agreed to a ‘full and final’ settlement.

Standard Innovation agreed to pay four million Canadian dollars (just under £2.5m) into an App Settlement Fund and a further one million Canadian dollars (a little over £600,000) into a Purchaser Settlement Fund. US consumers who bought a We-Vibe Bluetooth-enabled device before 26th September 2016 but did not use the app can submit a claim for up to $199 (£121), while those who bought a device and used the app to control it can submit a claim for up to $10,000 (£6,127) from the funds. The payments will be made pro rata, so the actual amount users will receive will depend on how many claims are eventually made, and after payment of Settlement Administrator expenses. There will be a limited time in which to make a claim, and only US consumers are eligible to submit a claim.

Retailers can be assured that they can continue to sell all We-Vibe products with confidence as the September 2016 We-Connect app update resolved the privacy and security concerns outlined in the case. Prior to September 2016, the We-Connect app included an optional registration process that allowed app users to provide their email address. If a customer registered on the We-Connect app, Standard Innovation obtained their email address. Standard Innovation insists that although the app also collected certain aggregate data regarding use, the company did not link this data to individual users and it was used solely for product improvement and diagnostic purposes. The data consisted of: time and date of use, vibration intensity level, vibration mode, temperature of the processor chip, and the battery life. Standard Innovation stated that it has never shared this aggregated data with any third party and the data has not been compromised but, consistent with the US settlement, it will permanently purge users’ email addresses and the aggregate, product improvement-related data.

The full text of the letter Standard Innovation sent to its partners reads as follows:

“You’ve likely seen media coverage related to the settlement of a US class action lawsuit naming Standard Innovation. We have agreed to settle this case so that we can focus on the business of designing and creating products. We maintain that our data practices comply with applicable laws, and that there was no wrongdoing in this case. We’d like to provide you with more information for your customers.

We take customer privacy and data security seriously. It’s important to let consumers know that there has been no compromise of We-Vibe users’ personal information or data.

In September, we responded rapidly to concerns about We-Connect app privacy and security. We enhanced our privacy notice, increased app security, provided customers more choice in the data they share, and we continue to work with leading privacy and security experts to improve the app. More details of these changes are available on our website.

As with many apps, certain limited data is required for the app to work on an individual’s device. That data is used in an aggregate and anonymous form that does not personally identify any individual We-Connect app users. Consumers may also choose to use We-Vibe products without the app. You can direct customers to our app Privacy Notice for more information on our privacy and data practices. The lawsuit is US-based, and the settlement applies to individuals in the United States. The Court has appointed a third-party Settlement Administrator. The Settlement Administrator is responsible for posting a website with information about the settlement and for processing claims. You can direct consumers seeking more information to SICclassactionsettlement.com. We expect the website to be live no later than March 21, 2017.”