Limiting Your Rights to Privacy in Collections


California takes the strong position that recording a telephone conversation requires the consent of both parties to the conversation in order to protect the privacy of Californians. See California Penal Code §§630-637.9. In fact, California has taken the extraordinary step of including a private right of action in the Penal Code to give consumers recourse in civil court if their privacy has been compromised through the illegal recording of their telephone conversations.

Discover Bank’s Discover Card contains in its adhesive contract for its credit card, the right to record telephone calls is buried therein:

Our Communications with You. You agree that our personnel may listen to or record telephone calls between you and our representatives without additional notice to you, including but not limited to calls we make to collect debts. We may use any medium permitted by law, including but not limited to mail, live telephone calls, automated telephone equipment,prerecorded telephone calls, e-mail and calls to your cell phone to contact

you about your Account or to offer you products or services that may be of value to you. If you prefer not to be contacted in one or more of these ways, you must either telephone us at 1-800-DISCOVER (1-800-347-2683) or write to us at Discover, PO Box 30961, Salt Lake City, UT 30961-0961.

The desired consequence of this provision is to limit any reasonable expectation of privacy a Californian might have in dealing with Discover representatives on the telephone, and that includes with their collection agents or any outside debt collector they may hire. While the provision allows a customer to “opt out,” doing so means losing the opportunity to address matters over the telephone with customer service as most consumers do.

In regard to California, the provision’s intent is to circumvent substantial privacy protections afforded California consumers in California Penal Code §§630-637.9.

When the caller is outside of California, but the consumer is in California, the aforementioned statute still applies. Kelly Kearney, et al v. Salomon Smith Barney, Inc., 39 Cal.4th 95, 137 P.3d 914 (Cal. July 2006). The California Supreme Court made it clear that California’s right to protect its consumer’s privacy is superior to the rights of other states to impose lesser restrictions.

What Discover Bank has sought to do in its adhesive contract is to secure apriori consent to record any and all conversations and eliminate any reasonable expectation of privacy Californians might have.

However, the Kelly Kearney court implies in dicta that consent must be given to each recording of a telephone conversation and offers an example of how that would be done – the familiar notice at the beginning of a conversation that, “this call is being recorded.” In Yoon v. Discover, CV08-04886 MMM (MANx), a trial court case from the U.S. District Court, Central District of California, the plaintiff argued just that position. If plaintiff’s argument were successful, it would make Discover’s apriori contract provision moot. However, the federal trial court in Yoon took the questionable position of interpreting the intent and meaning of the California Statute on its own, rather than deferring to the California Supreme Court’s dicta. The Yoon court thought the dicta in Kelly Kearney were at odds with the meaning of the statute and was, therefore, unpersuaded, choosing to substitute its own interpretation, namely, that the Discover contract provision was consent for any and all conversations to be recorded.

Bottom line: Watch out! Read those boilerplate credit contracts carefully or relinquish privacy rights.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Doukas, Michael Ernest Doukas, Attorney and Counselor | Attorney Advertising

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