As a leading data privacy software provider helping business owners to protect their businesses by installing and setting up cookie consent banners, accurate privacy notices, and opt-outs via our data subject request software. We are now seeing litigators using meta-pixels from Facebook and other trackers as a catalyst to pursue data breach and privacy lawsuits. While these can cost millions of dollars it doesn’t have to if you’re using Captain Compliance’s software tools with the proper privacy settings these headaches and attacks can be thwarted.
A Seismic Shift in Data Breach Litigation
If you think data breaches are solely the domain of cybersecurity experts and privacy attorneys, it’s time to recalibrate your risk assessment. Personal injury lawyers the same attorneys who built practices around car accidents, slip-and-falls, and medical malpractice are now aggressively pursuing data breach cases. And they’re winning.
The numbers tell a stark story. U.S. lawyers filed 1,488 class-action lawsuits related to data breaches in 2024, up from 1,320 in 2023 and just 604 in 2022. That’s a 146% increase in just two years. More alarmingly, companies reported over 1,700 breaches in the first half of 2025 alone—double the total for all of 2024. The litigation pipeline isn’t just growing; it’s exploding.
This isn’t a theoretical threat. This is a fundamental reshaping of the legal landscape that every small and medium-sized business collecting personally identifiable information (PII) must understand immediately.
Why Personal Injury Firms Are Flooding Into Data Breach Cases
The migration of personal injury attorneys into data breach litigation represents a calculated business decision driven by three converging factors: economics, legal precedent, and infrastructure.
The Economics Are Irresistible
Traditional personal injury cases require significant upfront investment. Car accident cases demand accident reconstruction experts, medical evaluations, and months of discovery. Data breach class actions, by contrast, offer a different calculus. Once a breach is publicly disclosed—often required by law—the plaintiff recruitment begins instantly. Firms can identify potential class members through data broker lists and targeted advertising, building massive classes of plaintiffs with minimal legwork.
The statutory damages framework amplifies the appeal. Under laws like the California Invasion of Privacy Act (CIPA), plaintiffs can pursue $2,500 per violation. Multiply that across thousands of affected individuals, and you’re looking at exposure in the tens or hundreds of millions. For a law firm operating on contingency, these cases offer extraordinary leverage in settlement negotiations.
Standing Doctrine Is Evolving in Plaintiffs’ Favor
Historically, data breach plaintiffs faced a significant hurdle: Article III standing. Federal courts consistently dismissed cases where plaintiffs couldn’t demonstrate concrete, particularized harm beyond the mere exposure of their data. Speculation about future identity theft wasn’t enough.
That’s changing. The Ninth Circuit’s 2024 decision in Greenstein v. Noblr marked a significant shift, holding that general notice to a plaintiff about unauthorized data access can satisfy standing requirements in certain contexts. While courts remain divided on what constitutes sufficient injury, the trend line is clear: the threshold for establishing harm is lowering. Personal injury attorneys, skilled at demonstrating damages, see an opening.
Courts are increasingly receptive to recognizing anxiety, emotional distress, and the time spent mitigating breach consequences as compensable injuries. When combined with the cost of credit monitoring and increased risk of identity theft, plaintiffs now have multiple pathways to establish standing that didn’t exist five years ago.
Infrastructure Advantages Personal Injury Firms Already Possess
Personal injury firms excel at two things that translate perfectly to data breach litigation: client acquisition and mass tort management. These firms have spent decades perfecting television advertising, digital marketing funnels, and referral networks. Pivoting that infrastructure to data breach victims requires minimal adjustment.
Moreover, personal injury attorneys are accustomed to fighting deep-pocketed defendants—insurance companies, hospital systems, Fortune 500 corporations. They’re not intimidated by complex litigation against well-funded adversaries. The psychological warfare and settlement pressure tactics they’ve honed in traditional PI cases work equally well in privacy litigation.
The Swigart-Tauler Model: Privacy Litigation as Volume Business
No discussion of this trend is complete without examining the firms driving privacy litigation awareness and establishing the playbook others are following: Swigart Law Group and Tauler Smith LLP.
These firms haven’t just entered the privacy litigation space they’ve industrialized it. Their focus on California’s privacy statutes, particularly CIPA and the state’s pen register/trap and trace laws, demonstrates how state-level privacy regulations create actionable claims that scale rapidly.
The CIPA Artillery
CIPA prohibits the intentional wiretapping or eavesdropping on confidential communications. Swigart and others have successfully argued that common web technologies session replay software, chatbots, third-party pixels like Meta Pixel constitute illegal wiretapping when they intercept user communications without proper consent.
This isn’t a niche theory. Courts are accepting it. When a healthcare website uses Meta Pixel to track user behavior without explicit consent, and that pixel captures form submissions containing medical information, plaintiffs’ attorneys argue this violates CIPA. The statutory damages framework means even a small healthcare provider could face millions in liability.
The Trap and Trace Expansion
Tauler Smith has pioneered litigation around California’s pen register and trap and trace laws, originally designed to regulate law enforcement surveillance of telephone communications. The firm argues these statutes apply to website tracking technologies that monitor user navigation and data inputs.
Website owners receive pre-litigation demand letters alleging violations, often with settlement demands designed to fall just below the cost of defense. The volume-based approach means these firms can send hundreds of demands monthly, converting even modest settlement rates into significant revenue.
Why This Matters Beyond California
While Swigart and Tauler Smith focus heavily on California law, their success creates a roadmap for personal injury attorneys nationwide. Other states have analogous wiretapping statutes WESCA in Pennsylvania, Florida, Massachusetts, and Washington all have two-party consent laws that could support similar theories. As more plaintiffs’ firms see the returns from privacy litigation, expect localized variations of the California model to proliferate even more than they already have.
The awareness these firms generate has another effect: they’re educating the personal injury bar about privacy litigation’s viability. Every settlement, every favorable court decision, every multi-million-dollar class certification makes privacy cases more attractive to attorneys who might otherwise stick to traditional PI work.
What Makes Data Breach Cases Different—And More Dangerous
They’re Not Just Class Actions Anymore
Traditional data breach litigation followed a predictable pattern: breach disclosure, class action filing, motion to dismiss on standing grounds, protracted discovery, potential settlement. Personal injury firms are disrupting this model with individual arbitration demands and smaller plaintiff groups that avoid class certification requirements while maintaining settlement pressure.
CIPA claims, for example, don’t require class-wide treatment to be financially devastating. A single plaintiff seeking $2,500 per violation across multiple website interactions can generate six-figure exposure. Multiply that across dozens of individual arbitrations which many companies’ terms of service require and you’ve created a defense cost nightmare that incentivizes settlement regardless of merits.
The Proof Is in the Pixels (Literally)
Unlike traditional personal injury cases where causation can be disputed, tracking technology violations are often self-evident. If your website has Meta Pixel installed and users can demonstrate it captured form data without consent, that’s documented. The code doesn’t lie. Discovery isn’t needed to prove the technology exists it’s visible in the website’s source code.
This evidentiary simplicity inverts the traditional litigation dynamic. Instead of plaintiffs struggling to prove harm, defendants must argue why documented behavior doesn’t violate statutes a much harder position to defend.
The Reputational Multiplier Effect
Car accident lawsuits don’t make TechCrunch. Data breach litigation does. The public nature of breach disclosures, combined with mandatory notification requirements, means privacy litigation plays out in the press. For SMBs, this reputational damage can exceed legal costs. Customers, partners, and investors all see the headlines.
Personal injury attorneys understand this leverage. The threat of public litigation provides additional settlement pressure that doesn’t exist in traditional PI cases resolved through insurance carriers behind closed doors.
The Expanding Definition of “Injury” in Cyber Cases
We’re witnessing a real-time evolution in how courts conceptualize harm in the digital context. The traditional model requiring actual financial loss or identity theft to establish standing—is giving way to a more nuanced understanding of privacy violations as inherently harmful.
Time as Compensable Injury
Courts are increasingly accepting that the time spent responding to a breach monitoring credit, freezing accounts, dealing with fraudulent charges—constitutes actual harm. This is significant because it’s quantifiable without requiring proof of actual identity theft. Every breach victim spends time mitigating risk, creating a baseline of compensable injury.
Anxiety and Emotional Distress Gaining Traction
While pure emotional distress claims still face skepticism in many jurisdictions, they’re no longer automatically dismissed. Courts recognize that discovering your social security number, medical records, or financial information is in criminals’ hands causes genuine psychological harm. When combined with medical documentation or expert testimony about the psychological impact of privacy violations, these claims can survive early dismissal motions.
The key shift: plaintiffs don’t need to prove actual identity theft to demonstrate injury. The increased risk of future harm, coupled with present anxiety, is becoming sufficient in more jurisdictions.
Diminished Value of PII
Some courts are recognizing that once PII is exposed, it loses value to the individual. Your social security number, for example, is less useful to you for identity verification once it’s compromised. This “diminished value” theory provides another pathway to establish concrete injury without waiting for actual misuse.
Why Traditional Breach Response Is Now Inadequate
If your breach response plan consists of “notify affected individuals, offer credit monitoring, issue a press release,” you’re fighting yesterday’s war.
Credit Monitoring Is No Longer a Shield
Offering free credit monitoring used to be the gold standard for breach response. It’s now table stakes and insufficient. Plaintiffs’ attorneys argue credit monitoring doesn’t address the full scope of harm. It doesn’t prevent medical identity theft. It doesn’t stop criminals from using stolen information for tax fraud. It doesn’t compensate for anxiety or time spent responding to the breach.
More critically, offering credit monitoring doesn’t insulate you from statutory damages claims under laws like CIPA. Those claims exist independent of whether you provide remediation.
The 72-Hour Window Is Critical
Under various state breach notification laws and emerging legal theories, the speed of your response matters. Delays in notification can be argued as aggravating factors that increase damages. But more importantly, delayed response provides time for plaintiffs’ attorneys to mobilize. The faster you respond, the less opportunity exists for organized legal action to gain momentum.
Legal Review Must Happen Immediately
Too many SMBs treat breach response as a technical problem first and legal problem second. That’s backwards. Before you send a single notification, before you post anything publicly, your legal counsel should be reviewing every word. Why? Because your notification language, your description of what happened, your characterization of risk—all of it will be parsed by plaintiffs’ attorneys looking for admissions or characterizations they can use against you.
Segregate Your Response Teams
Investigation findings should be protected by attorney-client privilege wherever possible. That means your forensic investigators should be retained through counsel, not directly by the business. Any preliminary findings should flow through your legal team. The plaintiffs’ bar will seek discovery of your incident response, and you need privilege protection around sensitive findings.
Practical Steps to Reduce Personal Injury Claim Risk
The time to address these risks is before a breach occurs. Post-breach mitigation is damage control; pre-breach preparation is risk prevention.
1. Audit Your Digital Tracking Infrastructure Now
Every pixel, every chatbot, every session replay tool, every analytics platform on your website creates potential CIPA exposure. Conduct a comprehensive inventory:
- Third-party tracking technologies: Meta Pixel, Google Analytics, TikTok Pixel, LinkedIn Insight Tag—catalog everything
- Session replay software: FullStory, Hotjar, LogRocket—tools that record user sessions
- Chatbots and communication tools: LiveChat, Intercom, Drift—anything capturing user inputs
- Form submission tracking: Any technology that captures data users enter into forms
For each technology, document:
- What data it collects
- When it collects data (page load, form submission, user action)
- Where data is transmitted
- Whether you have proper consent mechanisms in place
2. Implement Layered Consent Mechanisms
Generic cookie banners aren’t sufficient anymore. You need granular, affirmative consent for tracking technologies that might intercept communications:
- Explicit consent before data capture: For CIPA compliance, consent must be knowing and informed before interception occurs
- Separate consent for different technologies: Don’t bundle analytics with marketing pixels in a single consent checkbox
- Document consent timestamps and scope: Maintain records of what users consented to and when
- Provide easy opt-out mechanisms: Users must be able to withdraw consent
Consider implementing banner solutions that block tracking technologies from loading until affirmative consent is provided—not just after-the-fact notification.
3. Minimize PII Collection Ruthlessly
Every piece of PII you collect is potential liability in a breach. Ask critical questions:
- Do we actually need this data element for business operations?
- Can we use anonymized or pseudonymized data instead?
- Can we reduce data retention periods?
- Can we operate with aggregated data rather than individual-level data?
Many SMBs collect PII out of habit or because their platform defaults allow it, not because it’s necessary. Marketing analytics, for example, often don’t require individual-level identification to be useful.
4. Segment Your Data Architecture
Not all data should be equally accessible. Implement technical controls that limit breach scope:
- Network segmentation: PII should be on isolated systems with restricted access
- Encryption at rest and in transit: Non-negotiable for any PII
- Access controls and authentication: Multi-factor authentication for any system containing PII
- Least privilege principles: Employees and systems should access only data necessary for their function
The goal is that if a breach occurs, the attacker gets access to the minimum possible data set.
5. Establish Incident Response Protocols That Account for Litigation
Your incident response plan should include:
- Immediate legal team engagement: Define threshold triggers for when legal must be involved
- Communication protocols: Who can say what to whom, when
- Documentation procedures: What gets documented and where (with privilege protection)
- Notification timing and content: Pre-approved templates reviewed by counsel
- Settlement authority guidelines: Who can make settlement decisions and within what parameters
Run tabletop exercises annually. The first time you discover your incident response plan is inadequate shouldn’t be during an actual breach.
6. Review Your Insurance Coverage
Cyber insurance policies vary enormously in what they cover. Verify your policy specifically addresses:
- Statutory damages claims: Not all policies cover CIPA or similar statutory claims
- Individual arbitration costs: If you’re facing dozens of individual arbitrations, does your policy cover defense costs?
- Business interruption: Revenue loss during and after a breach
- Crisis management and PR: Reputational recovery can exceed direct legal costs
Many standard cyber policies were written before the personal injury litigation trend emerged. Your coverage may have gaps.
7. Reevaluate Third-Party Vendor Relationships
Your vendors’ breaches become your liability. Every third party with access to your customers’ PII creates risk:
- Contract for indemnification: Vendors should indemnify you for breaches originating in their systems
- Require proof of insurance: Vendors should carry adequate cyber insurance
- Demand SOC 2 or ISO 27001 certification: Verify vendors have adequate security controls
- Limit data sharing: Vendors should receive only data absolutely necessary for service delivery
- Regular security assessments: Contract provisions allowing you to audit vendor security
Your contractual relationship should shift as much breach liability as possible to the vendor responsible for the vulnerability.
8. Train Employees on Social Engineering and Phishing
The vast majority of breaches originate with human error—phishing emails, social engineering, weak passwords. Employee training is your first line of defense:
- Regular phishing simulations: Test employees with realistic scenarios
- Clear reporting protocols: Make it easy for employees to report suspicious emails
- No-blame culture: Employees should feel safe reporting mistakes
- Role-specific training: Finance team training should differ from general staff training
Documenting training efforts also helps demonstrate reasonable security measures if litigation occurs.
Settlement Trends and Future Predictions
The data breach settlement landscape is growing more expensive, not less. The factors driving this trend are structural, not cyclical.
Settlements Are Increasing in Frequency and Size
Class action settlements in the $10-50 million range are becoming routine for mid-sized breaches. Individual settlements in CIPA cases are trending toward five to six figures for cases involving sensitive data categories like health or financial information. Aspen Dental was not using Captain Compliance’s software and was hit with a $18.7 million settlement over data privacy violations.
The economics favor plaintiffs. Defense costs alone in multi-plaintiff litigation can reach hundreds of thousands or millions. Settling for less than defense costs becomes rational even when the defendant believes it would ultimately prevail.
The “Nuisance Settlement” Floor Is Rising
Pre-litigation demand letters used to target settlements in the $5,000-$15,000 range—just below the cost of mounting a defense. That floor is rising. Demands of $25,000-$50,000 per plaintiff are increasingly common, particularly in cases involving health data or financial information.
Why? Because plaintiffs’ attorneys have better data about what businesses will pay to avoid litigation. The settlement calculus is becoming more sophisticated on both sides.
Expect Seven-Figure Individual Settlements
While we haven’t yet seen widespread eight-figure individual settlements daily yet in data breach cases (outside class actions), the trajectory points there and it’s only a matter of time if SMBs and SME’s don’t start taking privacy requirements seriously. As courts continue accepting broader definitions of injury and statutory damages frameworks remain in place, the theoretical maximum exposure continues rising.
A single plaintiff with a strong CIPA claim against a healthcare provider could theoretically pursue millions in statutory damages if violations occurred across multiple interactions. While few cases will reach those numbers, the theoretical exposure shapes settlement negotiations.
Key Trends to Watch in 2026-2027
State-Level Privacy Statutes Create New Litigation Vectors
Comprehensive privacy laws in Virginia, Colorado, Connecticut, and other states are creating new private rights of action or enforcement mechanisms. While many don’t include the statutory damages frameworks that make CIPA so dangerous, they establish standards that plaintiffs can argue constitute the baseline for reasonable security measures.
Expect breach litigation to increasingly reference state privacy law requirements as evidence of what security measures were required, with failure to comply used as evidence of negligence.
AI and Algorithmic Decision-Making Will Produce Novel Claims
As more businesses use AI for decision-making involving PII, new liability theories will emerge. Was the data used to train the model properly consented to? Are the model’s outputs discriminatory in ways that violate civil rights statutes? Does the model’s use of PII violate privacy expectations?
Personal injury attorneys are already examining how to frame AI-related harms as actionable injuries.
Biometric Data Breaches Will Command Premium Settlements
Illinois’ Biometric Information Privacy Act (BIPA) has already produced massive settlements (Facebook paid $650 million). As more businesses collect biometric data—facial recognition, fingerprints, voiceprints—breaches involving this data will command outsized settlements.
Unlike Social Security numbers, which can theoretically be changed, biometric identifiers are permanent. Breach of biometric data represents lifetime risk to victims, and courts will compensate accordingly.
Federal Legislation Could Preempt State Claims—Or Make Them Worse
Congress has periodically flirted with comprehensive federal privacy legislation. If enacted, federal law might preempt state statutes like CIPA, potentially reducing litigation risk. But federal legislation could also create new private rights of action, potentially expanding exposure beyond current state-law limits.
Watch this space carefully. Federal legislation represents the wildcard that could fundamentally reshape the litigation landscape overnight.
The “Professional Plaintiff” Problem Will Intensify Scrutiny
Courts are becoming increasingly aware of plaintiffs who file dozens or hundreds of CIPA claims. These “professional plaintiffs” test websites looking for violations, then file serial litigation. While most courts currently allow these claims, growing judicial frustration may lead to doctrines limiting standing for plaintiffs who knowingly seek out violations.
However, this won’t help with claims from genuine customers who unknowingly had their data intercepted.
Act Now or Pay Later If You Don’t Use Data Privacy Software
If there’s one message every SMB owner and compliance professional should take from this analysis, it’s this: the cost of prevention is a fraction of the cost of litigation.
Settlement demands starting at $25,000 per plaintiff, defense costs of $100,000-$500,000 for even relatively simple cases, and class action settlements in the millions.
The personal injury bar has recognized that privacy litigation offers a massive, underexploited revenue opportunity. They’re bringing to bear the same client acquisition infrastructure, litigation tactics, and settlement pressure strategies that made them successful in traditional PI cases.
For SMBs, the question isn’t whether you’ll face privacy litigation it’s when, and whether you’ll be prepared when it happens.
The lawyers are coming. The only question is whether they’ll find you exposed or protected.
Need help conducting a privacy audit or implementing compliant tracking technologies? Contact Captain Compliance for a privacy risk assessment before the demand letter arrives or book a demo below with one of our compliance superheroes.
