The lawsuits shed a light on some of the issues arising as financial organizations, such as wealth managers, increasingly use digital information to manage their business operations, a situation that has arguably accelerated this year.

Envestnet|Yodlee, the data aggregation and analytics platform, which a few weeks ago rolled out a new offering for financial firms, is being sued in a class-action case investigating the way in which consumer data is collected and used, according to media reports. It also faces a separate suit linked to copyright issues; reportedly the firm is contesting that case, arguing that the claims against it are baseless.

Reports of the new developments in legal cases against Envestnet and its data aggregation arm, Yodlee appear in Barron’s, in turn citing a report that originally appeared on WealthManagement.com. 

“We believe the claims filed are baseless and intend to vigorously defend ourselves. As a matter of policy, neither Envestnet nor Yodlee comments on pending litigation. However, we adhere to leading industry practices for data security and privacy and adhere to applicable laws and industry guidance regarding the use of consumer data,” a spokesperson on behalf of Envestnet | Yodlee told Family Wealth Report today.

Envestnet completed its purchase of Yodlee in November 2015.

The complaint, filed in the US District Court for the Northern District of California, alleges the companies have insufficiently protected domestic consumer data and have failed to establish security protocols that are in place for Yodlee users in Europe, the reports said. Plaintiff Deborah Wesch also alleges that Yodlee intentionally gathers financial data from consumers who “often have no idea they are dealing with Yodlee”. (Wesch is a New Jersey resident.)

“We believe the claims filed are baseless and intend to vigorously defend ourselves,” an Envestnet | Yodlee spokesperson was quoted as saying. “As a matter of policy, neither Envestnet nor Yodlee comments on pending litigation. However, we adhere to leading industry practices for data security and privacy and adhere to applicable laws and industry guidance regarding the use of consumer data.”

Meanwhile, a US federal judge has allowed an unrelated lawsuit against Envestnet and Yodlee to move forward, although the judge dismissed two important counts related to copyright infringement, another report said. The plaintiff is reportedly FinApps, a software development firm that started to work with with Yodlee in 2016 and gave Yodlee access to its credit-decisioning software. 

“Notwithstanding the plaintiff-friendly standard on a motion to dismiss whereby the Court must accept all of FinancialApps’s allegations as true, the Court ruled in favor of Envestnet and Yodlee and actually dismissed two counts, including claims alleging copyright infringement and violations of the Illinois Deceptive Trade Practices Act. The claims filed by FinancialApps are baseless and we are vigorously defending ourselves. We hold ourselves to the highest ethical standards with regard to business dealings with customers, partners, and employees, particularly with respect to intellectual property rights,” the Envestnet | Yodlee spokesperson told FWR.