As independent banks continue to invest in digital platforms to better serve their customers and communities, the use of website tracking technologies such as cookies, pixels and session replay tools has become commonplace. These tools are essential for improving user experience, supporting marketing efforts and ensuring operational efficiency. However, a surge in lawsuits and regulatory scrutiny across the country has made website tracking a significant legal and reputational risk for banks of all sizes, including those serving towns and rural communities across the U.S.

Leaders in the banking industry must understand the evolving landscape of website tracking litigation, recognize which activities can trigger claims and implement robust compliance strategies to protect their banks. If your bank receives a legal demand or lawsuit related to website tracking, experienced legal counsel can make all the difference.

Understanding the Legal Landscape: Why Banks Are at Risk

Although much of the recent focus has been on California’s privacy laws, the risk of website tracking litigation extends nationwide. Importantly, a bank does not need to be physically located in California, conduct business there or even have California-based customers to be targeted. Plaintiffs’ attorneys can bring claims under California law if an individual from California accesses the bank’s website and alleges a violation.

Banks and financial institutions are increasingly accused of using website tracking tools that collect and share user data with third parties without proper disclosure or consent. These claims often cite violations of the California Invasion of Privacy Act (CIPA), various federal and state wiretapping statutes, general privacy laws and unfair competition regulations. The potential financial exposure is significant — CIPA, for example, allows for statutory damages of $5,000 per violation, and class actions can multiply this risk into the millions.

In addition to state laws, plaintiffs may allege that a bank has breached its obligations under the Gramm-Leach-Bliley Act (GLBA) by disclosing consumers’ financial or other non-public personal information without providing proper advance notice. As a result, banks face a complex patchwork of state and federal regulations, making it essential to understand and address these risks proactively.

Recent lawsuits have named major banks including JPMorgan Chase, Capital One and TD Bank for embedding tracking pixels on their websites, allegedly transmitting customer information to third parties like social media platforms. While some cases have been dismissed for lack of evidence, the trend is clear: Banks are increasingly in the crosshairs, and even small to mid-size and community institutions are not immune. 

What Business Activities Trigger Claims?

Several common business activities have been at the center of recent litigation:

• Embedding Tracking Pixels or Session Replay Tools: Placing these technologies on online banking portals, loan application pages or account management sections can inadvertently transmit sensitive financial or personal data to third parties.
• Inadequate Privacy Notices: Failing to clearly disclose what data is collected, how it is used and with whom it is shared can violate both state and federal requirements.
• Lack of Customer Consent or Opt-Out Mechanisms: Not providing customers with meaningful choices about data collection, especially for marketing or behavioral advertising, can lead to claims premised on state privacy laws and the GLBA.
• Failure to Honor Opt-Out Requests: As more laws and regulations require businesses to honor browser-based privacy controls, banks must ensure their systems can detect and respect these signals.
• Vendor Management Gaps: Relying on third-party analytics or advertising partners without robust contractual protections can result in unauthorized data sharing and regulatory exposure. 

How Companies Can Protect Themselves

To mitigate the risk of website tracking litigation, community banks should take the following steps:

1. Audit Your Tracking Technologies: Regularly review all tracking tools and scripts on your websites to ensure they do not collect or transmit personal or financial data without explicit customer consent.
2. Enhance Transparency and Consent: Update privacy policies to clearly disclose tracking activities and implement robust cookie consent mechanisms that comply with applicable laws.
3. Limit Data Collection: Only collect data necessary for your business purposes and avoid gathering sensitive information unless absolutely required and legally justified.
4. Review Vendor Agreements: Ensure contracts with third-party tracking providers include appropriate data protection provisions and clarify roles and responsibilities.
5. Regularly Assess Risks: Periodically review your tracking practices and stay informed about evolving legal requirements and regulatory guidance.
6. Train Your Team: Educate employees involved in website management and marketing about privacy obligations and compliance best practices.

Responding to Website Tracking Claims: Practical Guidance

When a bank receives a demand letter or lawsuit related to website tracking, it’s important to respond promptly and with a clear strategy. Legal and technical professionals can provide valuable support in addressing these issues. Common areas of assistance include:

• Coordinating technical audits and forensic reviews of website tracking tools.
• Evaluating the legal basis of claims and assessing potential exposure.
• Preparing responses to demand letters and formal complaints.
• Managing litigation, including motions and class action defense.
• Facilitating settlement discussions and regulatory communications.
• Advising on compliance improvements to reduce future risk.

By working with professionals who understand both the legal and technical dimensions of website tracking, independent community banks can better manage risk, maintain compliance and protect their reputation. Whether addressing an active claim or proactively reviewing practices, taking informed steps can help safeguard business operations in a rapidly evolving legal and regulatory environment.