Ottawa-based 'We-Vibe' sex-toy maker settles US intimate data lawsuit for $5 million

We-Vibe launches We-Vibe 4 Plus, an app-compatible vibrator for couples to use together or apart. (PRNewsFoto/We-Vibe)

A Canadian vibrator maker accused of secretly tracking the intimate habits of thousands of its customers through a smartphone app has agreed to spend $5 million to settle a privacy lawsuit in the United States.

Under the deal that still requires final court approval, Ottawa-based Standard Innovation will pay Americans who bought its We-Vibe sex toy before Sept. 26, 2016, up to US$199 each. Users who controlled the vibrator via its We-Connect application will get up to US$10,000 each -- although the actual amounts in both cases are likely to be much lower.

The company, which denies any wrongdoing, will also have to destroy much of the personal data it had collected through the app. The data includes time and date of use, the user-selected vibration intensity level and pattern and the temperature of the device, according to court documents.

While the exact number of users is unknown, company records indicate about 300,000 people bought a Bluetooth enabled We-Vibe product and more than 100,000 downloaded and used the app, an affidavit by the plaintiffs' lawyer, Eve-Lynn Rapp, states.

According to Rapp's estimates, app users will likely end up with about US$500 each, while product buyers will get about US$40 -- significantly less than half the purchase price.

Notices of the tentative settlement will appear, among other places, in People and Sports Illustrated magazines.

"The notice will provide class members with information about the settlement and explain how to file claims," Rapp told The Canadian Press Tuesday. Canadian residents are not eligible, Rapp said.

The class action was launched in September by a Chicago-area woman known as N.P., who bought a We-Vibe Rave vibrator for US$130 in May 2016. A second plaintiff, P.S., joined the suit last month.

According to the statement of claim, users had to download the We-Connect app to allow them or their partners to remotely control the Bluetooth-equipped vibrator's settings. The app's "connect lover" feature, which promises a secure connection, lets partners exchange text messages, conduct video chats and control a paired We-Vibe device.

However, the claim asserts, that information -- along with the email address associated with the user -- was also sent in real time to the company's Canadian servers.

The secret data collection is "highly offensive" because the users' information "reveals intimate private details about their sexual behaviour that they believed were confidential," causing them embarrassment and anxiety, the claim states.

"(N.P.) would never have purchased a We-Vibe had she known that in order to use its full functionality, (Standard Innovation) would monitor, collect and transmit her usage information through We-Connect."

The suit alleged the company's conduct violated federal wiretapping, privacy and unjust enrichment laws.

The settlement calls on Standard Innovation to set aside $4 million to fund claims by users of the app and $1 million to fund the purchase claims. The $5 million is the full amount of the company's insurance, court records show.

The agreement also calls on the company to forgo a registration process and collection of email addresses related to its We-Connect application. It will also have to update its privacy notice to make its data-collection practices explicit.

A hearing on a final court approval is expected in August.

In a statement, Standard Innovation called the settlement fair and reasonable, and said it had already taken steps to enhance customer privacy and data protections.

"We continue to work with leading privacy and security experts to improve the app," the company said.