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Sephora, Retail Equation Misused Customer Data, Lawsuit Alleges

July 9, 2020, 7:57 PM

Sephora USA Inc. allegedly shared customer data without permission to determine shoppers’ likelihood of fraudulently returning product purchases, according to a proposed class action in California.

Sephora’s data sharing with The Retail Equation Inc. led to a “risk score” that resulted in the cosmetics retailer denying valid returns, the suit filed July 7 in the U.S. District Court for the Central District of California claims.

The suit, which names Sephora and The Retail Equation, shows the legal risk companies face when handling customer data.

The complaint alleges violations of the federal Fair Credit Reporting Act and state statutes including the Unfair Competition Law of California.

Plaintiff Shadi Hayden and other proposed class members claim Sephora shared the purchase, return, and exchange history of customers and their government-issued identification information.

The Retail Equation then used “statistical and modeling analytics” to determine a customer score, the suit alleges. If the score fell below a certain threshold, The Retail Equation told Sephora to deny any attempted return or exchange, the complaint claims.

Causes of Action: California’s Unfair Competition Law; California Business & Professions Code; the Fair Credit Reporting Act; invasion of privacy; unjust enrichment; unconscionability; and defamation.

Relief: Class certification; court order declaring that defendants are permanently enjoined from their improper conduct and practices as alleged; monetary relief including actual and statutory damages, restitution, and disgorgement; pre-judgment and post-judgment interest; attorneys’ fees and costs.

Potential Class Size: “Thousands of consumers throughout the United States,” according to the suit.

Response: Sephora, USA Inc. and The Retail Equation, Inc. did not immediately respond to request to comment.

Attorneys: Ahdoot & Wolfson, PC and Abington Cole + Ellery represent the plaintiff and the proposed class. Counsel for Sephora USA, Inc. and The Retail Equation, Inc. couldn’t be immediately identified.

The case is Hayden v. The Retail Equation, Inc., C.D. Cal., No. 20-cv-01203, complaint 7/7/20.

To contact the reporter on this story: Julia Weng in Washington at jweng@bloombergindustry.com

To contact the editor responsible for this story: John Hughes at jhughes@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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