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Vanderbilt Settlement Implications for Data Based Cross Selling

Despite dismissal of all claims of breach of duty of loyalty, the court ruled that the plaintiffs in this case sufficiently supported the defendants’ failure to “secure competitive bids for certain plan services”, in violation of ERISA. This case eventually moved to settlement, with terms similar to those of other well-known university 403(b) plan cases, yet with an interesting term regarding the utilization of plan data collected by plan service providers (ex. recordkeepers and investment managers), for the purpose of cross-selling unrelated products or services to plan participants. Specifically, the current recordkeeper, Fidelity, must refrain from using plan data gathered in the course of performing its recordkeeping duties in order to market or sell unrelated products to Vanderbilt plan participants. Reference to such a provision within settlement terms is not the norm. Nonetheless however, it is something that may become more commonplace as the issue of data privacy permeates the consumer experience, regardless of product.

www.planadviser.com; April 29, 2019.