This Wisdom of the Crowd (ACC member discussion) addresses whether failure to notify sales prospects that their sales calls are being recorded, and without their consent (and potentially a violation of US state laws), serves as enough of a business risk to alert firm management that they should alter this organizational practice. This resource was compiled from questions and responses posted on the forum of the IT, Privacy and eCommerce ACC Network.*
*Permission was received from ACC members quoted below prior to publishing their comments in this Wisdom of the Crowd Resource.
Question:
I just found out that our business development representatives are using a system that records every phone interaction they have when they are calling prospects. Our representatives know the call is being recorded, but there is no warning to the person they are calling (i.e., the sales prospect) that the call is being recorded.
Our sales and business development people love this feature, and it would not really be feasible to try to get consent from the person they are calling. So I do not think there is any question that we are violating the laws on recording phone calls in a number of states (about ten) that require consent from both parties. Now I have to be the bearer of the bad news and try to convince management that this is a big legal risk, which will not make me popular.
So before I fight this battle, I would like to try to find out if this is a big risk or more of a theoretical risk. First, it is unlikely anyone would find out that his/her conversation was being recorded. These are all business-to-business (B2B) calls and the number of calls will not be huge, so the potential for any kind of class action if anyone did find out would seem to be limited. It also seems unlikely that this is the kind of thing law enforcement would want to prosecute.
So my question to the group is whether I should insist that we stop this practice (which would probably require me to go to outside counsel to bolster my opinion), or whether I should just let our management know what the law is and let them decide whether the potential risks outweigh what they perceive to be the clear business benefits to recording these calls.
As with many situations, the biggest risk is probably from a terminated and disgruntled employee.
Any thoughts would be appreciated. Thanks!
Wisdom of the Crowd:
Response #1: From my perspective, you are playing with fire. In the states where recording someone without their consent is illegal, it is usually a criminal misdemeanor. As in-house counsel, I would stand firm on this, as you cannot properly represent the company's interests if you allow them to commit crimes.
One common compromise that you might want to consider is to have every call coming in to the sales associates start with a prerecorded message that says something like "this call is being recorded for quality and training purposes." That way, at least they (prospects) are placed on notice, and in SOME of the states at issue, notice and the decision to stay on the call is enough.1
Response #2: I have seen this before: there is a dispute over what was agreed to on a call and the vendor's sales representative says there is a recording to prove that he is right and the customer is wrong. The customer's business people are surprised that they have been recorded without notice or consent and bring it to their leadership and to legal. There are obvious legal consequences, of course, and those take time to resolve and business is on hold during that process. But the more significant consequence is that the vendor's business relationship with the customer is damaged, business is shifted to a different vendor while things are worked out, and the customer has a lingering sense that the vendor is shady. And if the choice for new business is between shady a vendor and different vendor, why not just go with a different vendor?2
Response #3: Federal laws require only one-party consent to recording a call. However, the states differ widely in their comparable laws. The states' laws govern all calls that are "intrastate" calls, i.e., those originating and terminating in the same state, including local calls. Many of the states require that all parties consent to any recording of a call. All means all. So unless you fall within one of the few exceptions, you are probably in violation of the law in a number of states. (And that could have criminal as well as civil repercussions.) There are only a couple of exceptions to the prohibitions on recording calls. One exception is viewed generally as a "quality control" exception. (That is not exactly what the law says, but its use as a justification for recording is commonplace. The Federal law talks of service observing (usually for training) and "random" monitoring for quality control. If you want to dig further into this, look at 18 USC 2511(2)(a)(i) and also read the legislative history and cases. There are a few.) I have always cringed at companies suggesting that a call may be recorded (or observed by a third party) for quality control purposes because I really doubt that is the real reason companies are actually doing that.In any event, do not consider this an incidental infraction. It is serious, especially in an environment where personal privacy is increasingly important to individuals and government. I suggest you stop it until you have very good advice from qualified outside counsel. Otherwise, you may end up hearing from a state official, a class action lawyer, or a newspaper.3
Response #4: I agree with response #3. I would not take it lightly as this is an area of fairly significant litigation activity. You could go to outside counsel to understand whether a particular state's law applies to business-to- business (B2B) calls but in the end, you also have to think about the prospects and customers, their privacy expectations, and the business relationships that could be soured.4
Response #5: I agree wholeheartedly with response #3. This presents HUGE risk for your company. Several states -- two that come to mind are California (CA) and West Virginia (WV)-- impose criminal liability for recording telephone calls without the other parties' knowledge and/or consent. I do not understand the reasons why you state that "would not really be feasible to try to get consent from the person they are calling." A simple statement at the beginning of each call that the call is being recorded is sufficient. It puts the other person on notice and gives him/her the option to end the call or to continue listening. If your representatives call someone, and that person then transfers the call to someone else, the disclosure must be given again. Do not take this lightly. The fact that you are calling other businesses does not change the analysis - there is still a person on the other end of the call, who in many states, has the right to not be recorded if he or she desires.5
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1Julie Pacaro (February 11, 2017)
2Anonymous (February 11, 2017)
3Martin McCue, Counsel, SureWest Communications (February 13, 2017)
4Anonymous, (February 14, 2017)
5Andrew C. Hall, Legal Compliance Officer & General Counsel, Estate Information Services, LLC (February 14, 2017)
Region:
United States
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