The Escalating Threat: Navigating the Massive Increase In Cookie Banner Class Actions

Every week we are hearing more and more stories about a new privacy lawsuit because of a cookie banner that was not properly configured. If you’re using a cookie consent management tool and it’s not properly respecting users privacy preferences which is most likely the case otherwise you wouldn’t be reading this article right now. You’re at risk and we can help get you compliant.

The Escalating Threat: Navigating the Rise of Cookie Banner Class Actions

Cookie banners, those ubiquitous notifications that greet users upon entering a website, were intended to be a solution – a mechanism for transparency and user control in the complex world of online data collection. Ideally, they would empower users with clear information about data practices and offer meaningful choices, while simultaneously providing website operators with a tool for compliance and a potential shield against legal challenges.

However, the reality has proven far more complicated. A new wave of litigation, fueled by allegations of faulty cookie banner implementation, is sweeping across the legal landscape, transforming these seemingly benign elements of web design into a significant source of legal exposure for businesses.

The Anatomy of a Cookie Banner Lawsuit

These emerging class actions follow a consistent pattern:

1. A user visits a website.
2. The website presents a cookie banner, offering options to “decline” or opt out of non-essential cookies.
3. The user selects the option to decline or opt out.
4. Due to a technical error within the cookie banner’s code or implementation, the website fails to effectively block all non-essential cookies. We have heard this from 3 clients recently using a tool called CookieYes according to the client who received a Swigart Law demand letter.
5. The website continues to collect and process user data through these non-essential cookies, despite the user’s expressed preference.
6. The user, unaware of the faulty implementation, continues browsing under the false assumption that their privacy choices are being respected.

The resulting lawsuits contend that this discrepancy between user expectation and actual practice constitutes a violation of user rights and exposes businesses to a range of legal claims.

The Breadth of Affected Industries

It’s crucial to note that these lawsuits are not confined to specific industries or types of businesses. To date, plaintiffs have targeted a diverse array of entities, including:

• Retailers
• Healthcare
• Automotive
• Telecommunications providers
• Hospitality companies
• Fast-food chains
• Media companies
• Beverage producers

The unifying characteristic of these defendants is simply that they operate a public-facing website with a cookie banner that is alleged to have malfunctioned. This widespread vulnerability underscores the pervasive nature of this issue and its potential to impact virtually any organization with an online presence. We are also seeing historic privacy laws being used to file these claims. One the Electronic Communications Privacy Act is over 30+ years old and was not written with the intention of the world wide web but is now being used in the context by respected law firms like Almeida Law in Chicago, Illinois.

Arbitration Maneuvers and the Road to Class Action

Plaintiffs’ legal strategies have often involved a preliminary step of filing arbitrations. This tactic isn’t primarily aimed at resolving the core privacy dispute through arbitration. Instead, it’s used to challenge the applicability of the defendant’s arbitration clause, typically found within the website’s Terms of Use.

In several instances, plaintiffs have successfully argued that these arbitration provisions are either inapplicable to the cookie banner claims, or that users never truly agreed to the terms containing the arbitration clause. These favorable arbitration rulings pave the way for plaintiffs to pursue more extensive class action litigation in both federal and state courts, significantly increasing the potential liability for defendants.

Legal Claims and Challenges

While no single U.S. federal law explicitly prohibits faulty cookie banners, plaintiffs are leveraging a combination of existing statutes and common law principles to pursue their claims. Common causes of action include:

1. Invasion of Privacy (State Constitutions): Asserting that the unauthorized collection of data violates the privacy protections afforded by state constitutions. The most common one is the California Invasion of Privacy Act is driving the most litigation by firms like Pacific Trial Attorneys.

2. Intrusion Upon Seclusion: Claiming that the surreptitious data collection constitutes an unreasonable and offensive intrusion into the user’s private affairs.

3. Wiretapping (State Laws): Citing state wiretapping statutes, such as the California Invasion of Privacy Act (CIPA), to argue that the unauthorized data collection involves the “interception” of electronic communications.

   • For example, the California Privacy Protection Agency (CPPA) has demonstrated a growing focus on the enforcement of CIPA, as evidenced by recent actions against companies like Honda Motors for alleged violations related to the use of recording technologies.

4. Use of a Pen Register/Trap and Trace Device (State Laws): Relying on state laws regulating the use of pen register or trap and trace devices to capture electronic communication metadata.

5. Common Law Fraud, Deceit, and/or Misrepresentation: Arguing that the faulty cookie banner constitutes a misrepresentation of the website’s data collection practices, deceiving users into believing their privacy choices are being honored.

6. Unjust Enrichment: Seeking restitution for the alleged unauthorized use and benefit derived from the collected user data.

7. Trespass to Chattels: Asserting that the unauthorized placement of cookies and tracking technologies constitutes a trespass against the user’s computer or device.

The Evolving Landscape of Privacy Expectations

These cookie banner lawsuits are pushing the boundaries of established legal arguments in online privacy litigation. Plaintiffs are attempting to redefine the concept of a “reasonable expectation of privacy” in the context of website browsing.

In the past, courts have often been reluctant to acknowledge a strong expectation of privacy for general browsing data that users voluntarily transmit to websites. However, plaintiffs are now arguing that a faulty cookie banner fundamentally alters this dynamic. They contend that users have a heightened expectation of privacy when a website explicitly provides a mechanism to opt out of data collection, as a broken cookie banner creates a false promise of privacy.

Defenses and Hurdles for Plaintiffs

Despite the growing number of lawsuits, plaintiffs still face significant hurdles in these cases:

1. Standing (Federal Court): In federal court, plaintiffs must establish Article III standing, which requires demonstrating a concrete and particularized injury-in-fact caused by the defendant’s actions. This can be challenging in privacy cases where the harm is often intangible.
2. Personal Jurisdiction: If the lawsuit is filed against a defendant located outside of the jurisdiction, the court must have personal jurisdiction over the defendant. This requires establishing sufficient minimum contacts between the defendant and the forum state.
3. Cognizable Damages: Plaintiffs must demonstrate that they have suffered actual, quantifiable damages as a result of the alleged privacy violations.
4. Wiretapping Claims: Wiretapping claims under CIPA require proving an “interception” of the “content” of a communication, a requirement that can be difficult to satisfy in the context of cookie tracking.
5. Class Identification: Identifying and defining the class of affected users presents a significant challenge. To be a class member, an individual must have both visited the website and opted out of non-essential cookies. However, many websites do not reliably record which specific users opted out, making it difficult to ascertain the class membership.

The Urgent Need for Proactive Action

The rise of cookie banner litigation underscores the critical importance of proactive measures to ensure the proper functioning of these privacy tools. Several factors contribute to the vulnerability of websites:

1. Dynamic Website Environments: Websites are constantly evolving. Updates to website architecture, new marketing campaigns, and the addition or removal of features can inadvertently disrupt the functionality of a cookie banner.
2. Lack of Consistent Monitoring: Unlike core website functionality issues, which are often immediately apparent, cookie banner malfunctions can go undetected for extended periods. This lack of ongoing monitoring increases the risk of significant liability.

Recommendations for Businesses

To mitigate the risk of cookie banner litigation, businesses should implement the following strategies:

1. Rigorous Testing: Conduct thorough and regular testing of your cookie banner’s functionality, not only during initial implementation but also after any website updates or changes.
2. Regular Audits: Implement a schedule for periodic audits of your cookie consent management platform (CMP) and related technologies to ensure they are operating as intended.
3. Compliance Expertise: Seek guidance from legal and technical experts to ensure your cookie banner implementation aligns with all applicable privacy regulations.
4. Detailed Documentation: Maintain comprehensive records of your cookie banner configuration, testing procedures, and any updates or modifications.
5. Stay Informed: Keep abreast of the latest legal developments and regulatory guidance regarding cookie banner requirements.

Are You Involved In Cookie Banner Litigation? 

Cookie banner litigation represents a significant and evolving threat to businesses operating online. By understanding the nature of these claims, recognizing the potential pitfalls, and implementing proactive measures, organizations can better protect themselves from legal exposure and demonstrate a commitment to respecting user privacy. The key takeaway is clear: vigilance and proactive compliance are no longer optional, they are essential for navigating the complex and litigious landscape of online data privacy.

To protect against this book a demo below with one of our privacy experts.