Mercor, a Silicon Valley startup valued at $10 billion, is facing a wave of legal trouble after a massive data breach exposed the private information of thousands of its contractors, according to a report.
Background of the breach
According to The Wall Street Journal, at least seven class-action lawsuits have been filed against the company in recent weeks after the company confirmed a third-party data breach. Mercor hires contractors to provide feedback that helps train artificial intelligence (AI) models for tech giants like OpenAI, Anthropic, and Meta. However, a breach involving a third-party partner has reportedly leaked everything from recorded job interviews to facial scans and even screenshots of workers’ private computer screens.
Details of the lawsuits
The lawsuits, including one filed on Tuesday (April 22) in Northern California, do more than just complain about the hack; they offer a rare look at the aggressive tactics the company allegedly uses to gather data. According to the legal filings, plaintiffs claim Mercor engaged in several controversial practices, including:
- Tracking contractors’ screens and sharing that private activity with clients
- Sharing background checks and applicant data with partners in ways that may violate federal regulations
- Using recorded video interviews of job candidates to train AI models without proper disclosure
- Training models on materials that might actually belong to other companies
Mercor's response to allegations
In a public statement, the startup stood its ground, calling the lawsuits “speculative” and inaccurate. Regarding the data breach itself, the company noted that they were not the only victims. “We strongly dispute the speculative claims in these lawsuits and look forward to presenting the facts at the appropriate time and place,” Mercor said in a statement. “We take the privacy of our customers, contractors, employees and those we interview very seriously, and we comply with all relevant laws and regulations,” the company said, adding that it acted quickly to remediate the data breach. “We are conducting a thorough investigation with leading third-party forensics experts and are communicating directly with affected stakeholder groups as we have findings,” it said.
Meta has already stopped working with Mercor and indefinitely suspended all work with the startup valued at $10 billion.
