Loandepot faces growing number of data breach lawsuits

A cyber attack resulted in Loandepot’s system Early January ushered in a wave of lawsuits alleging lenders and servicers failed to protect the personally identifiable information of their past and current customers.

Another class-action lawsuit was filed in California on Tuesday, Bringing the total number of pending class action lawsuits to two – at present.

On Wednesday, two law firms, Lynch Carpenter in Pennsylvania and Emerson in Texas, publicly solicited help from clients affected by the data breach, potentially setting the stage for more class-action lawsuits against lenders. Pave the way.

The incident forced Loandepot to temporarily shut down most of its systems, exposing the private information of 16.6 million current and former customers. As of Thursday, Loandepot was fully operational, a company neutral said.

A class action lawsuit filed by Loandepot borrower Jonathan Rosa claims the company “[willfully failed] Preventing data leakage by claiming that customer PII is secure when in fact it is not. Rosa’s lawsuit also accuses mortgage companies of not investing adequately in privacy and security protections.

Loandepot declined to comment.

The lawsuit points to Loandepot’s security policies, in which the lender claims it “takes steps to protect … personal and sensitive information through industry-standard physical, electronic and operational policies and practices.”

“Despite all of these promises, Loandepot allowed a data breach to occur on January 8, 2024, and Plaintiffs’ and Class Members’ personal confidential PII was viewed, disclosed and obtained by unauthorized parties,” Rosa’s lawsuit states.

According to the lawsuit, customers affected by the breach face the following risks: Identity theft and fraud.

Loandepot isn’t the only company in the financial services space to be hit with lawsuits recently over cyberattacks. Mr. Cooper and Fidelity National Financial Both companies face similar accusations after security breaches that exposed customer data.

Historically, class action lawsuits like the one currently being filed against Loandepot, Mr. Cooper and Fidelity have taken considerable time to settle in court.

For example, in Equifax data breach In 2017, the PII of 147 million people was exposed, and it took six years to settle in court, with the credit bureau eventually agreeing to pay the collective $425 million.

At the same time, for Citywide Home Loans A settlement was reached in July 2023 to resolve claims surrounding the 2020 breach.

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