Onfido’s biometric data privacy arbitration case looks awfully iffy
Arbitration cases generally are pretty two dimensional. When a buyer signs a contract requiring that any subsequent disagreements must be settled by an arbiter, that buyer will not be suing in court for perceived wrongs.
Then there is the case of Fredy Sosa v. Onfido, which is before a three-judge panel of the Seventh Circuit Court of Appeals, Onfido is trying mightily to force arbitration in a biometric data privacy disagreement that involves Onfido, one of its vendor partners and a customer of that partner.
OfferUp, the partner in question, is an online marketplace that contracted with Onfido, which requires arbitration, to provide its TruYou biometric ID verification app for marketplace members, including Sosa. OfferUp does not force arbitration on members.
That Onfido collects, uses or stores facial biometric identifiers of OfferUp members is a fact. That Illinois-resident Sosa never expressly consented to that is also a fact. Consent is necessary under Illinois’ Biometric Information Privacy Act.
The question is, are OfferUp members bound by the arbitration clause for the actions of a third-party vendor.
In oral arguments last week, appellate Judge Thomas Kirsch, questioned the rationale of Onfido attorney Bonnie DelGobbo of BakerHostetler, according to an article by publisher Law360.
Kirsch said arguments made now by DelGobbo about legal theory involving arbitration seem to contradict previous arguments she has posed. No decision has been made on the question yet.
It is an important question for many if not most technology firms. Arbitration clauses become more common among consumer product makers every year.
Arbitration as a rule favors vendors over customers. It is private, and non-disclosure agreements are common. That means, a company never has to publicly disclose the outcome, which is handy if it loses.
And the privacy precludes transparency, which invites questions of the arbiter’s competence and objectivity.
Arbitration costs are rising, too. While it can be much less expensive overall than going to court, it still gives a significant advantage to vendors over consumers.
It typically also is the end of the line for the complaining party. No appeal is available usually, so any deal struck, including non-disclosure, is final.
Some plaintiffs in TikTok’s biometric data privacy suit are seeking arbitration instead of agreeing to the proposed settlement, while in a suit against Amazon, plaintiffs are arguing against being sent to arbitration.