Pandora (NYSE: P) is the latest company to stumble into the minefield of privacy lawsuits that are blowing up all over the tech industry. A new complaint says the Internet radio provider violated the privacy of its Michigan subscribers and demands it pay each of them at least $5,000.
The claim is based on a 1988 state law called the Video Rental Protection Act that imposes fines for disclosing a customer’s purchase or rental histories related to videos, books or sound recordings. The law is a more robust version of a federal one passed the same year after a newspaper created a privacy flap by publishing the video rental history of a Supreme Court nominee. That federal law, which some regard as a relic of the analog era, has been back in the news because it is preventing Netflix (NSDQ: NFLX) from participating in Facebook’s recently announced news ticker feature.
In the Pandora case, first reported this week, subscribers claim the radio service violated the law when it permitted anyone on the Internet to view their profile pages. These pages, which Pandora had said would only be visible to a limited number of other subscribers, contained information like a person’s user name and musical preferences. The lawsuit says Pandora committed a second violation when it merged users’ accounts with their Facebook accounts without notifying them. It says this forced integration “released sensitive listening information to all its users’ Facebook friends.”
The lawsuit, which was filed in California, seeks statutory penalties of $5000 for every Pandora subscriber in Michigan and another $5000 for those same subscribers whose accounts were merged with Facebook. If a judge agrees to let the class action go forward, Pandora and the plaintiffs will likely settle out of court for an undisclosed amount.
This is not the first time Pandora has been caught up in a privacy class action. In the past year, it has been sued over allegations it shared personal information that it obtained from its Apple (NSDQ: AAPL) and Android apps. Pandora has had a rocky time of it since going public in June. The money-losing company hit an opening day high of $26 per share but its stock has since bumped along closer to the $13 level.
The case may also be a cautionary tale for another Internet radio service, Spotify, which came under fire this week for forcing its users to access their account through Facebook.