Lendistry (B.S.D. Capital, Inc.) and Plaid · Governance finding · severity 1 of 5
A proposed class action filed in Los Angeles County Superior Court on 28 October 2024 alleges that online lender Lendistry (B.S.D. Capital, Inc.), which administered a California COVID-19 relief grant programme, let third parties take applicants' data without consent. According to the complaint, as reported by American Banker and Law.com, its bank-verification partner Plaid repeatedly accessed applicants' bank accounts, and its AI chatbot provider Qualified used machine learning on chat transcripts and fed them into its AI. Plaid and Qualified are not defendants. Lendistry denied the allegations and called them baseless. Lendistry removed the case to federal court in November 2024; a federal judge sent it back to state court in June 2025 and later ordered Lendistry to pay $26,520 of the plaintiffs' fees for the removal. No ruling on the merits has been reported.
Record last reviewed Oct 21, 2026 · Markdown
Date
Institution
Lendistry (B.S.D. Capital, Inc.), Plaid
Country
United States
AI system
Qualified chatbot; call-centre and bank-data analytics · Customer-facing AI chatbot and machine-learning analysis of applicant data, as described in the complaint · vendor: Qualified and other third parties named in the complaint
AI?
Described as AI by the institution or regulator
The institution, a regulator or a court called the system AI.
Category
Status
Court filing
Severity
1 of 5
Impact
The complaint defines the proposed class as all persons in California who applied to Lendistry for the grant; it describes them as "thousands of California businesses and California residents". No class has been certified. · No customer loss from the alleged data use has been quantified in the sources reviewed. Separately from the AI claims, the lead plaintiff firm says it was entitled to a grant of more than $30,000 but received $5,000.
What happened?
Lendistry, a Los Angeles small-business lender whose legal name is B.S.D. Capital, contracted with the California Governor's Office on 25 April 2023 to administer the Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program. Applicants had to create an account on the Lendistry app and verify their bank account. On 28 October 2024 a Los Angeles accounting firm and two individuals filed a proposed class action in Los Angeles County Superior Court on behalf of all California applicants to the grant, bringing sixteen claims under California law, including privacy, wiretapping (California Penal Code sections 631, 632 and 632.7) and unfair-competition claims.[1][2][3]
According to the complaint, as described by American Banker, Lendistry's bank-verification partner Plaid logged in to an applicant's bank account "multiple times a day every day thereafter for the purpose of harvesting data" after what the applicant believed was a one-time check. The complaint also alleges that Lendistry's customer-facing AI chatbot provider, Qualified, used machine-learning software to analyse chats for behavioural and biometric information and that its AI system "trains itself on the communications", and that call-centre conversations were captured by a third party "for incorporation into AI models". Plaid and Qualified were not named as defendants; Plaid declined to comment and Qualified did not respond to American Banker.[1]
The plaintiffs' attorney, J.R. Howell, told American Banker the suit concerned "Lendistry's sharing with and use of confidential business data to undisclosed third-parties via artificial intelligence and advanced machine learning technologies". Law.com reported that the suit accuses Lendistry of breaching a contractual duty to protect beneficiaries' privacy "by deploying AI technologies that harvested class members' business, behavioral and biometric data". These are the plaintiffs' allegations; no court has tested them.[1][2]
Lendistry removed the case to the US District Court for the Central District of California on 27 November 2024 under the Class Action Fairness Act and moved to dismiss. On 24 June 2025 Judge Maame Ewusi-Mensah Frimpong granted the plaintiffs' motion to remand, finding Lendistry had not shown minimum diversity, sent the case back to Los Angeles County Superior Court and denied the motion to dismiss as moot. On 27 October 2025 the court awarded the plaintiffs $26,520 in attorneys' fees for the remand motion, against a request of $240,000.[3][4][5]
When did it happen?
- Apr 25, 2023
Lendistry contracts with the California Governor's Office to administer a COVID-19 supplemental paid sick leave relief grant programme.[3]
- Oct 28, 2024
A proposed class action against Lendistry is filed in Los Angeles County Superior Court, alleging unconsented data sharing with third parties, including through AI.[2][3]
- Nov 6, 2024
American Banker reports the complaint's allegations about Plaid and the AI chatbot provider Qualified; Lendistry denies them.[1]
- Nov 27, 2024
Lendistry removes the case to the US District Court for the Central District of California.[3][5]
- Jun 24, 2025
The federal court grants the plaintiffs' motion to remand and returns the case to Los Angeles County Superior Court.[3]
- Oct 27, 2025
The federal court awards the plaintiffs $26,520 in attorneys' fees for the remand motion.[4]
What was the impact?
- Customers: The complaint defines the proposed class as all persons in California who applied to Lendistry for the grant; it describes them as "thousands of California businesses and California residents". No class has been certified.[1][3]
- Other: No customer loss from the alleged data use has been quantified in the sources reviewed. Separately from the AI claims, the lead plaintiff firm says it was entitled to a grant of more than $30,000 but received $5,000.[1][3]
Severity 1 of 5: A proposed class action with allegations only: no court has ruled on the merits, and no customer loss, regulatory action or remediation tied to the AI claims has been reported.
How did Lendistry (B.S.D. Capital, Inc.) and Plaid respond?
A Lendistry spokeswoman told American Banker: "Lendistry takes appropriate steps to protect the privacy of our customers' information. We deny the allegations in the complaint and intend to vigorously defend against these baseless claims." Plaid declined to comment, and Qualified did not respond to American Banker's request.[1]
What was the outcome, and did regulators act?
The case is pending in Los Angeles County Superior Court after the June 2025 remand; the federal court's only rulings concerned jurisdiction and fees. No ruling on the merits, class certification, settlement or regulator action has been reported as of 21 October 2026 in the sources reviewed (federal docket, CourtListener, American Banker, Law.com).[3][4][5]
What is the Lendistry AI data lawsuit about?
Filed in October 2024 in Los Angeles County Superior Court, the proposed class action alleges that Lendistry, while administering a California COVID-19 relief grant, let partners take applicants' data without consent: Plaid allegedly kept logging in to bank accounts, and chatbot provider Qualified allegedly fed chat transcripts into its AI.
Are Plaid and Qualified defendants in the Lendistry case?
No. American Banker reported that many of the alleged privacy violations involve Lendistry's technology partners Plaid and Qualified, but they are not named as defendants; Lendistry, legally B.S.D. Capital, Inc., is the only defendant. Plaid declined to comment and Qualified did not respond to American Banker.
Has a court ruled on the AI claims against Lendistry?
No. The federal court's rulings were only about jurisdiction: in June 2025 it sent the case back to state court because Lendistry had not shown minimum diversity, and in October 2025 it ordered Lendistry to pay $26,520 of the plaintiffs' fees. No merits ruling has been reported as of October 2026.
What did Lendistry say about the lawsuit?
A Lendistry spokeswoman told American Banker in November 2024 that the company takes appropriate steps to protect customers' information, denied the allegations in the complaint and said it intended to vigorously defend against what it called baseless claims. No later public statement was found as of October 2026.
- Lawsuit: Lendistry, Plaid and Qualified violated consumer data rights news
- California Loan Agency Hit With Proposed Class Action Over Alleged Third-Party AI Data Harvesting news
- Order granting request for judicial notice and granting motion to remand, Case No. 2:24-cv-10314-MEMF-SK (C.D. Cal.) court
- Order granting plaintiffs' motion for attorneys' fees, Case No. 2:24-cv-10314-MEMF-SK (C.D. Cal.) court
- Docket, Case No. 2:24-cv-10314 (C.D. Cal.), B.S.D. Capital, Inc. d/b/a Lendistry court
When AI goes wrong at a bank, the next morning's brief says so.
when one of these regulators moves, the next morning's brief says so · six sourced stories · 7 am PT · free
plus every regulation, bank and agent page update, the morning after · leave any morning