Tracking Your Cyber Coverage: Pixel and Other Privacy-Related Litigation

• Pages: 16-20
• Date: 01 October 2024
• Author: Eric Jesse,Heather Weaver

Insurance Coverage Litigation

Vol. 33 No. 3

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Published in Coverage Vol. 33 No. 3. Copyright © 2024, American Bar Association. All rights reserved. This information or any portion thereof

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Tracking Your Cyber Coverage: Pixel and Other Privacy-

Related Litigation

By Eric Jesse and Heather Weaver

Does it ever feel as though your every move on the internet is being monitored? That websites

and social media platforms know all about your shopping habits, desired travel plans, hobbies,

medical history, and more? They might, according to some plaintiffs’ lawyers. Unbeknownst to

users, a tiny digital tool called a tracking pixel may be embedded on websites, which collect

information about user behaviors and interactions. The data collected by the pixel and similar

tracking tools can be invaluable to businesses, advertisers, and marketers, who use that

information to target a tailored audience and accelerate sales. However, the benefits of this

technology can come with privacy risks, a growing concern for many companies and, in turn,

their insurers. As large privacy class action lawsuits arising out the alleged wrongful collection

and distribution of personal information are filed in courts across the country, insurers are

working to try to minimize their coverage obligations for these lawsuits.

This article discusses (1) the current legal landscape surrounding pixel and similar tracking

technologies, (2) cyber insurance restrictions and limitations that are becoming more common in

response to these privacy claims, (3) mitigation measures companies can take to be a more

desirable risk to cyber insurers, and (4) a new area of growing concern in the privacy technology

space that cyber insurers are monitoring closely.

Pixel Litigation on the Rise

The legal environment surrounding pixels and similar tracking technologies is complex and

rapidly evolving. Over the last few years, there has been an explosion of privacy-based

investigations and massive class action lawsuits. In 2023 alone, more than 250 lawsuits were

filed raising various privacy concerns related to tracking tools, according to a Bloomberg Law

docket search. These lawsuits primarily target two different defendant groups: (1) the providers

of the pixel tools, including Google, Meta, and Adobe; and (2) companies that allegedly use

these tracking technologies on their own websites or apps for data collection, such as hospitals

and healthcare providers. While companies across a wide range of industries have been known to

use these tracking tools, the healthcare and financial services industries are especially susceptible

to such claims based on confidential and sensitive data that they handle.

The Meta pixel, while undoubtedly a powerful data-gathering tool, has exposed the company to

potentially significant liability. For example, there is a putative class action lawsuit against Meta

pending in California, which consolidates nearly 20 individual lawsuits. Plaintiffs allege, among

other things, that Meta knew or should have known that its pixel tracking tool was being used on

hospital websites to collect the private medical information of users. The collected data, which

were allegedly sent to Meta, were then used to create personalized ads. According to the HIPAA

Journal, at least 664 hospital systems and medical providers were sending patient data to Meta

through the pixel tool. At a January 17, 2024, hearing on Meta’s motion to dismiss this class