Last month, a federal district court in the Northern District of California issued an order that may affect the policies of any company that records telephone conversations with consumers.

The trouble began when plaintiff John Lofton began receiving calls from Collecto, Verizon’s third-party collections agency, on his cell phone.  The calls were made in error – Lofton did not owe Verizon any money because he wasn’t even a Verizon customer – but Lofton decided to take action when he discovered that Collecto had been recording its conversations with him without prior notice.  Lofton brought a class action against Verizon under California’s Invasion of Privacy Act, theorizing that Verizon was vicariously responsible for Collecto’s actions because Collecto was Verizon’s third-party vendor and because Verizon’s call-monitoring disclosure policy did not require the disclosure of recordings in certain situations. Verizon filed a motion to dismiss, arguing that the recordings did not invade Lofton’s privacy and therefore did not run afoul of the statute. 

The court denied the motion to dismiss, holding that the statutory language of § 632.7 of the Invasion of Privacy Act banned the recording of all calls made to cell phones – not just confidential or private calls made to cell phones – without prior notice.  The statute’s treatment of cell phones thus diverges from its treatment of landlines, as recordings of calls made to landlines only have to be disclosed via prior notice if the call is “confidential.”

Though the case is ongoing, this ruling indicates that Lofton v. Verizon Wireless (VAW) LLC ultimately may have a significant impact on how companies interact with consumers over the phone. First, the prevalence of cell phones means that companies should assume that § 632.7 applies to a large percentage of its calls with consumers – not only because it is highly likely that these consumers use cell phones instead of landlines, but because it may be difficult for the company to tell whether these consumers are in California and subject to § 632.7. Second, this recent order indicates that companies may be held responsible for their third-party vendors’ lack of disclosure, meaning that companies should change their policies to require their third-party vendors to refrain from recording phone conversations without prior notice, and also monitor the vendors for compliance with this requirement.  In sum, when it comes to providing prior notice of recordings to consumers, companies shouldn’t phone it in – they should ensure they and any third party vendors err on the side of disclosure to avoid legal hangups down the line.