Call Monitoring Taps Interstate Issue

The California Supreme Court ruled July 13 that California’s “two-party consent” call monitoring law trumped other states’ “one-party consent” laws. This case has generated significant commentary, generally from the viewpoint of how the decision affects everyday privacy rights.

One question left unaddressed is what effect, if any, this ruling has on the recording and monitoring practices of the teleservices industry. Teleservices is unique in many respects, but perhaps in none more so than in its need to engage in constant monitoring of its employees’ telephonic activities.

It is crucial to the industry to provide quality customer/consumer experiences via the telephone, both inbound and outbound calls. Ongoing quality monitoring is not just a helpful tool, it’s a necessity.

Equally vital is the industry’s need to comply with state and federal rules that govern virtually every aspect of the teleservices process. Call monitoring and recording let the industry not only comply with many of these rules, but also maintain records regarding telephone calls and transactions as a way to limit potential liability.

The United States can be divided into “one-party” and “two-party” consent states based on how they handle the call monitoring question: 39 states have a one-party consent rule. For a teleservices entity seeking to conduct quality control, record-keeping and billing activities via call monitoring, the one-party consent states are easily managed. Inserting a standard clause into human resources materials or employment contracts that obtains the permission of all telephone sales representatives normally suffices to meet statutory/regulatory requirements.

The remaining 11 states have statutory language that requires two-party (or “all-party”) consent: California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Pennsylvania and Washington.

Whose State Rules?

The industry’s main issues in complying with the two-party rules are determining whether an exemption exists in a two-party state that removes the need to seek consent of the consumer on the call; and figuring out which state’s rule applies in the context of interstate calling.

The issue of whether a state’s two-party rule extends to other states has been directly addressed by only three states.

In Lord v. Lord, decided in 2003, the Superior Court of Connecticut addressed whether Connecticut or New York law would be controlling with regard to a tape recording made in New York of a telephone conversation with a person in Connecticut. The court found in favor of Connecticut’s two-party rule, even though the recording took place in New York.

Massachusetts, despite similar circumstances to the Connecticut ruling, came to the opposite conclusion. In the 1999 case of Macneill Eng’g Co. v Trisport Ltd., the U.S. District Court for the District of Massachusetts upheld a lower court ruling that “secretly recording a conversation outside Massachusetts does not give rise to liability under [Massachusetts’ wiretapping statute] even if the call originated in Massachusetts.”

California now has sided with Connecticut, ruling that “permitting all … businesses to regularly and routinely record telephone conversations made to or from California clients or consumers without the clients’ or consumers’ knowledge or consent would significantly impair the privacy policy guaranteed by California law … At the same time, application of California law will not have a significant detrimental effect on [the other state’s] interests …”

In the absence of clear guidance from the remaining two-party states, it becomes a business decision for each telemarketing entity that uses call monitoring/recording to determine which state law to apply.

Many companies simply default to the law of the two-party state into which they are calling, despite the recording/monitoring taking place outside the state. Other companies, seeking to avoid wherever possible having to disclose that “this call may be monitored or recorded for quality control and other purposes,” instead may choose to take advantage of the ambiguity in the laws.

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