Texas Attorney General Ken Paxton has initiated legal action against Allstate Insurance, accusing the company and its subsidiary, Arity, of illicitly gathering, utilizing, and selling the driving data of more than 45 million Americans. The lawsuit, filed in Montgomery County, Texas, alleges that Allstate and Arity covertly built the "world’s largest driving behavior database" using data from mobile devices, in-car systems, and vehicles, amassing "trillions of miles" worth of information.

Paxton asserts that Allstate paid millions to embed tracking software within third-party apps, enabling real-time monitoring of users' locations and movements without their knowledge or consent. The lawsuit contends that this data was then used to justify insurance rate hikes and sold to third parties, including other insurance companies, generating further profit for Allstate.

The lawsuit claims that Allstate violated the Texas Data Privacy and Security Act, the Data Broker Law, and the Texas Insurance Code by failing to inform consumers about their data collection practices and obtain their consent. Paxton is seeking a permanent injunction against Allstate's data collection practices and substantial civil penalties per affected customer. He emphasized that this is the first enforcement action by a state attorney general to uphold a comprehensive data privacy law.

While Allstate maintains that its data collection practices are fully compliant with all laws and regulations, Paxton's lawsuit challenges this assertion. The suit alleges that Allstate never disclosed the extent of their data collection, how the data would be used or monetized, or obtained explicit user consent for these practices.

Republican Attorney General Ken Paxton speaks during a rally. (AP Photo/Nick Wagner, File)

Texas state Capitol in Austin, Texas. (Tamir Kalifa/Getty Images)

Tom Wilson, chairman and chief executive officer of Allstate Corp. (Misha Friedman/Bloomberg)