PDCflow recently kicked off a series of blogs based on the California Association of Collectors 2018 courses. The first class was a webinar hosted by panelists attorney David J. Kaminski, Shawn Suhr and Courtney Reynaud. The subject, call recording laws, was too dense for a single article.

Our first piece focused on the basic state and federal laws governing call recording, with a closer look at the rules in place for the state of California. We’ll continue the conversation here based on the insight provided by attorney Kaminski, partner at Carlson & Messer LLP (a Los Angeles-based civil litigation defense firm). This piece will further examine California’s statute and will discuss establishing call recording consent.

What is CIPA

The California Invasion of Privacy Act, Penal Code section 632, et seq., is the law that governs call recording in the state of California. While a federal law requires only one party give consent to recording of a conversation, California is one of many states that requires two-party consent, where all those involved in the conversation must consent to the recording.

What Does the Plaintiff Have to Prove?

There are several elements of a CIPA claim that a plaintiff must prove during litigation:

  1. That the defendant intentionally recorded the conversation by using an electronic device.
  2. Plaintiff had a reasonable expectation that the conversation was not being recorded – Kaminski noted that “if someone knew or should have known [you were recording the conversation], you may have an argument that there should be no liability under the law.” For example, if you gave the plaintiff a prior recording warning in the days before the call, this could potentially help you defend yourself against their claims.
  3. That the defendant did not have the consent of all parties to the conversation to record it – If the plaintiff remains silent or does not stop a conversation after being notified that they are being recorded, this may be considered to give rise to implied consent. Ensuring that you clearly notify all persons on the call, at the outset of that call, that it is being recorded can help to minimize the risks of claims of illegal call recording.

There is a difference in the courts between “express consent” and “implied consent.”  The CIPA does not require express consent. Express consent requires that all parties must actually state they consent, and implied consent requires only that they don’t specifically object to being recorded. Kaminski says that most California courts have found implied consent to be a satisfactory form of consent to call recording.

If the plantiff seeks damages:

  1. It must be proved that the plaintiff was harmed.
  2. Plaintiff must show that the defendant’s conduct was a substantial factor in causing said harm.

Statute of Limitations

The statute of limitations for a call recording violation is one year. However, it is subject to California’s discovery rule. Kaminski explains this discovery rule through the citation of Ion Equip. Corp. v. Nelson, 110 Cal. App. 3d 868, 880 (1980).

This case established that under the right circumstances, if a recording of a conversation is discovered even years after the conversation took place, the statute could begin with discovery of the recording–not on the date the parties spoke.

Statutory Damages

Those who have violated CIPA may face both criminal and civil liability components. Criminal liability is not often enforced during call recording lawsuits (as it pertains mostly to instances of intentional illegal surveillance). The potential for financial harm coming from rather severe civil damages, however, should be enough to convince your collection agency to obtain consent during every call.  The damages provided under 637.2 are $5,000 per violation.

How to Establish Call Recording Consent

Due to recent court cases (Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95, 118 (2006); see also Maghen v. Quicken Loans, Inc.), it is generally accepted if a business notifies all parties at the outset of a call that the call is being recorded, this action may fulfill the statutory consent requirement.

Unfortunately, the courts haven’t yet fully decided what constitutes the ‘outset’ of a call. Some argue that outset is defined as before the non-recording party speaks. To mitigate the risks of litigation, your agency should consider creating a policy or procedure that ensures your collectors or an automatic recording notification informs all parties of the call recording at the earliest point possible.

Showing a prior awareness that the call would be recorded can also establish consent. This can be done through means such as prior conversations with the parties involved where notice about recorded calls was provided. If an agent somehow neglects to mention call recording during a particular call, but the other party was given prior notification of such recording, their participation may possibly indicate that they still consent to the current conversation being recorded.

While this prior notice can help you potentially defend a case in court, Reynaud points out it can still become “a pretty expensive mistake.” Although you may win a court decision due to prior notice, your agency must still bear the expense of legal fees to prove you were in the right.

To avoid allegations of violation in the first place, Reynaud has long been an advocate that “On a recorded line is your middle name.”  Kaminski states that companies should stress to their agents how important call recording notifications are. If you teach them to view the notice as part of their own name, (Ex. “this is Jim Smith on a Recorded line, is Jenny available”), they’ll say it every opportunity required, decreasing your agency’s risk of having to fight the issue in court.  Also critical is to consider an inbound call recording warning that consumers cannot bypass.  

As with all legal matters, though, be sure to consult your agency’s attorney regarding the most appropriate way to establish call recording consent within your business.

Out-of-State Parties

If an agency based out of a one-party consent state records a conversation with a California resident, it is important to know that CIPA laws still apply. In fact, keeping track of state recording laws can become complicated, and you may not even know where an individual is currently residing if you are contacting them on a mobile phone. To simplify matters and keep your agency covered, it is safest to follow two-party consent practices if you do business across state lines.   

Suhr points out that failing to give this warning to debtors within your state can open you up to potential liability exposure. Improper call recording notification could create a class of individuals who may file suit against your agency. And with no cap on class action damages–as shown above–this could be a business-ending mistake.

Takeaways from Recent Case Law

A number of recent cases (Raffin v. Medicredit, Inc., Zaklit v. Nationstar) have left Kaminski with a few thoughts:

  • Takeaway 1 – Liability under the CIPA is broad. Based on the current state of the law, it is best to give a recording advisory before your consumer speaks to avoid litigation.
  • Takeaway 2 – The consent to record issue can cause “individual issues” that predominate a class – GOOD FOR DEFENSE. Meaning, if you can establish that there are so many individual issues with regard to the issue of consent, i.e., who consented and who did not, because the company had a recording warning protocol in place, including prior call recording notification, that may help you defend a class-action suit.

The bottom line?

“You should have written policies and procedures that you follow,” says Suhr. “And you want to try to get that call record warning out in as many different types of communication as possible.”  Kaminski notes that providing a call recording warning notification in written communications to consumers can also help pave the way for multiple defenses to CIPA individual and class action claims.

It is imperative to train your payment collection agents. It is imperative to have and maintain written policies and procedures. After all, strict, compliant measures while running your collection agency’s day-to-day operations are the best (and most cost-effective) defense against litigation.

The second CAC educational webinar is scheduled for August 22nd and will cover call baiting and handling stalls and objections. For additional webinar details see:

CAC Call Baiting Webinar Information


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