Clearview AI faces more legal uncertainty in UK and US

While Clearview AI has finally settled some of the legal cases against it, the U.S. facial recognition company remains in danger of penalties and legal actions on both sides of the Atlantic.

On Monday, the UK’s data privacy watchdog called for the reinstatement of a 7.5 million pounds (US$10 million) fine against the company, arguing that the judges who overturned it in 2023 made errors in their decision. The appeal case, which was heard at the Upper Tribunal in London, marks yet another turn for the drawn-out dispute.

The country’s Information Commissioner’s Office (ICO) issued an enforcement notice to the firm in May 2022, requiring Clearview to delete the personal data of UK individuals collected through facial recognition technology, along with a fine for alleged UK General Data Protection Regulation (GDPR) violations. The following year, however, the company successfully appealed the enforcement action.

At the time, Clearview argued that its clients are exclusively foreign government bodies or their contractors exercising criminal law enforcement and national security functions, which are out of the UK’s legal scope. The UK’s First-Tier Tribunal agreed with the firm.

That decision is now being challenged by the ICO with the help of Privacy International, which was permitted by the court to intervene in the proceedings, according to MLex.

The data protection authority says that the lower court decision failed to distinguish between Clearview’s clients that were foreign states and those that were private contractors working for foreign states or their law enforcement bodies. In this way, the First-Tier Tribunal illegitimately extended the immunity that foreign states have against the UK GDPR to private sector entities, according to ICO’s solicitor, Timothy Pitt-Payne.

Clearview AI’s defense, on the other hand, argues that only 20 percent of its clients are private contractors.

The company is facing other penalties in Europe, including one levied by the Italian data protection regulator for violating the EU’s GDPR.

In April, Data Protection Authority Commissioner Guido Scorza said that he has been working with U.S. authorities to notify Clearview of its enforcement action and the 20 million euro (US$22.8 million) fine levied in 2022. The fine is currently unpaid while Italian citizens’ data remains on Clearview’s servers despite orders to delete it.

Clearview in danger of more lawsuits in the US

Clearview is also still facing scrutiny on its home turf.

In May, the company officially settled a five-year-long biometric data privacy lawsuit against it after multiple consolidation orders and rounds of mediation. The nationwide class settlement awarded a payout to the plaintiffs from a 23 percent equity stake in Clearview, which will be triggered by an IPO or a liquidation event such as a sale or bankruptcy.

As of January 2024, Clearview’s value was estimated to be approximately $225 million, making the settlement worth $51.75 million.

But not everyone is happy with the result, according to a legal analysis of the case by the Troutman Pepper Locke law firm. The U.S. state of Vermont, for instance, filed its own lawsuit in April, which could ban Clearview AI from operating within that state if successful.

“More states that follow suit, create greater jeopardy for Clearview AI’s business model for jeopardizing the potential monetary relief of the class,” says Daniel Waltz, one of the law firm’s associates.

The May settlement was approved over the objection of attorneys general from 22 states and the District of Columbia. They argued that the deal does not guarantee that consumers who filed the lawsuit will get monetary compensation. If Clearview AI’s worth drops, the plaintiffs may end up with nothing.

Another concern is the lack of a meaningful injunctive relief, meaning that the company was not ordered to stop doing something harmful or illegal nor was it forced to take a specific action to repair harm.

“I just think that this settlement really does provide precedent for creative settlement negotiations and terms,” says Lauren Geiser, another associate at Troutman Pepper Locke. “I know the AGs obviously are not a fan of the 23 percent because it could be nothing for the class, but it could also be very lucrative to the class, depending on how this unfolds and how Clearview performs.”

Article Topics

biometric data  |  biometrics  |  Clearview AI  |  facial recognition  |  Information Commissioner’s Office (ICO)  |  lawsuits  |  United States