It hasn’t been a great week for GameStop, all things considered. The company reported a decline in sales and increase in losses today before attempting to offset that news by announcing a new partnership with crypto exchange FTX. While the GameStop stock did receive a little bump following the reports of its quarterly earnings, it’ll have a new issue to deal with in the form of a lawsuit filed against the company in California.
As Samantha Hawkins of Bloomberg reports, a proposed class action suit was filed by Miguel Licea in California federal court alleging that GameStop was in violation of California’s Invasion of Privacy Act. The suit alleges that GameStop secretly logged customer service chats, then shared those chat transcripts with a third-party company that mined the transcripts for personal data, and for that personal data to be used for marketing purposes, all without users’ consent.
The chat function on GameStop’s website is a familiar one for anyone who’s tried to get customer service help from a company website. Instead of selecting email or phone call options, users can use the chat option to try to quickly solve issues that they’re having.
The civil suit proposed in California alleges that GameStop created transcripts of those chat conversations without users’ knowledge that they would, and would then move those transcripts to a third-party company, who would subsequently harvest the data contained in those transcripts for marketing purposes.
The Invasion of Privacy Act forbids recording or tapping private communication without the consent of all parties involved. Notably, GameStop’s chat function in the “Contact Us” section of its website was disabled at time of writing, displaying only a message that reads “Sorry, we are not online at the moment.”
Obviously, there’s a long way to go before this lawsuit is even accepted in court and any theoretical court case begins. But it’s not a good bit of news from a company that already appears to be floundering in many respects.