Earlier this month, the California Supreme Court handed down a decision in Smith v. LoanMe interpreting California’s call recording statute, Cal. Penal Code 632.7. The decision clarifies that not only must non-participants to a call obtain consent from the parties to listen in on or record the call, but parties to the call must also obtain consent to record. Cal. Penal Code 632.7 makes it a crime when a person, “without consent of all parties to a communication,” intercepts or intentionally records a communication transmitted between a cellular or cordless telephone and another telephone.
The decision, which overturned an earlier ruling by the California Court of Appeals, focused on both the plain language of the statute as well as its legislative history. Accordingly, the Court found that a failure to construe the statutory language broadly would leave substantial gaps in protections provided to individuals. The effect of the Court’s holding will impact all businesses that place outbound calls to California residents for quality assurance or other business purposes. As a requirement, businesses must now obtain informed consent from the called party.
Adding to the fray, the Court’s decision leaves open what exactly qualifies as an adequate notice under the statute. In Smith, the Court passed over whether a beep tone at the beginning of the call constituted sufficient notice under the statute, instead opting to remand the issue back to the Court of Appeals for decision. In light of the Court’s inaction, businesses that monitor or record their calls should expressly disclose at the outset that the call is being recorded.
Cal. Penal Code 632.7 comes with hefty penalties. A person whose privacy rights are violated pursuant to Section 632 can bring a private right of action and may recover $5000 for each violation.
The broad interpretation of the statute, coupled with the lack of clear parameters, creates a plaintiff-friendly environment and increases the likelihood of consumer class action filings. Businesses calling into California should proceed cautiously and review internal processes for obtaining consent to monitor or record calls.
*Tanner Lawrence contributed to this post.
Michele is the Managing Partner at M&S and former Chief of the Ohio Attorney General’s Consumer Protection Section. Bringing more than two decades of experience in the consumer protection arena, she advises highly regulated businesses on a wide range of telemarketing, privacy, and other consumer protection matters.