Viewpoint: The Risks of Recording Business Calls

By Gary L. Wickert and Lee R. Wickert, Matthiesen, Wickert & Lehrer, S.C. | July 2, 2021

You might ask what Kamala Harris was best known for prior to becoming the first female vice president in US history. One piece of notoriety was, as attorney general of the state of California, she oversaw the prosecution of Wells Fargo & Co., the American multinational bank and financial services company for violation of §§ 632 and 632.7 of the California Penal Code.

The allegation was that the company failed to timely and adequately disclose its automatic recording of phone calls with members of the public. That criminal prosecution led to a settlement in which Wells Fargo paid total fines of $7,616,000, reimbursed the prosecutors’ investigative costs of $384,000, and agreed to contribute $500,000 to two statewide organizations dedicated to advancing consumer protection and privacy rights. The previous year, Attorney General Harris reached a similar settlement with Houzz Inc., an online platform for home remodeling and design. Houzz had been recording incoming and outgoing telephone calls but failing to notify all parties on the call that they were being recorded.

Businesses who record telephone calls for “training and quality assurance” purposes should be on high alert that their actions could carry significant consequences. The same is true for insurance professionals and claims investigators who record phone calls and interviews with witnesses. Knowing and understanding the law in this area is an absolute necessity; and complying with it is not always easy.

Companies record incoming calls for a variety of reasons. True, it is sometimes for purposes of training an employee when complaints are made. In the same sense, the recording is also technically done for “quality assurance” purposes. But contact centers and companies often also rely on the records to assist them if and when claims are made against them and for other reasons having nothing to do with training and quality. But there are risks for both companies and individuals when a phone call or conversation is recorded.

Individuals, businesses, and the government often have a need to record telephone conversations that relate to their business, customers, or business dealings. Congress and most state legislatures have passed telephone call recording statutes and regulations that may require the person wanting to record the conversation to provide notice and obtain consent before doing so. Most states require one-party consent, which can come from the person recording if present on the call. However, some states require that all parties to a call consent to recording.

Laws governing telephone call recording are typically found within state criminal statutes and codes because most states frame call recording as eavesdropping, wiretapping, or as a type of intercepted communication. State laws may not explicitly mention telephone call recording because of these technical definitions. Accordingly, counsel may need to infer when and under what circumstances a state permits telephone call recording by reviewing prohibited actions.

The big issue when it comes to recording someone is whether the jurisdiction you are in requires that you get the consent of the person or persons being recorded. This begs the question of which jurisdiction governs when you are talking to a person in another state. Some states require the consent of all parties to the conversation, while others require only the consent of one party. It is not always clear whether federal or state law applies, and if state law applies which of the two (or more) relevant state laws controls. A good rule of thumb is that the law of the jurisdiction in which the recording device is located will apply. Some jurisdictions, however, take a different approach when addressing this issue and apply the law of the state in which the person being recorded is located. Therefore, when recording a call with parties in multiple states, it is best to comply with the strictest laws that may apply or get the consent of all parties. It is generally legal to record a conversation where all the parties to it consent.

One-Party Consent

If the consent of one party is required, you can record a conversation if you’re a party to the conversation. If you’re not a party to the conversation, you can record a conversation or phone call provided one party consents to it after having full knowledge and notice that the conversation will be recorded. Under Federal law, 18 U.S.C. § 2511(2)(d) requires only that one party give consent. In addition to this Federal statute, thirty-eight (38) states and the District of Columbia have adopted a “one-party” consent requirement. Nevada has a one-party consent law, but Nevada’s Supreme Court has interpreted it as an all-party consent law.

All-Party Consent

Eleven (11) states require the consent of everybody involved in a conversation or phone call before the conversation can be recorded. Those states are California, Delaware, Florida, Illinois, Maryland, Massachusetts, Montana, Nevada, New Hampshire, Pennsylvania, and Washington. These laws are sometimes referred to as “two-party” consent laws but, technically, require that all parties to a conversation must give consent before the conversation can be recorded.


What constitutes “consent” is also an issue of contention when you are considering recording a conversation. In some states, “consent” is given if the parties to the call are clearly notified that the conversation will be recorded, and they engage in the conversation anyway. Their consent is implied. For example, we have all experienced calling a customer service department only to hear a recorded voice warning, “This call may be recorded for quality assurance or training purposes.” It is usually a good practice for practitioners to let the witness know they are recording the conversation to accurately recall and commemorate the testimony being given – such as during the taking of a witness’ statement.


Nearly all states include an extensive list of exceptions to their consent requirements. Common exceptions found in a majority of states’ laws include recordings captured by police, court order, communication service providers, emergency services, etc. Generally, it is permissible to record conversations if all parties to the conversation are aware and consent to the interception of the communication. There are certain limited exceptions to the general prohibition against electronic surveillance. For example, so-called “providers of wire or electronic communication service” (e.g., telephone companies and the like) and law enforcement in the furtherance of criminal investigative activities have certain abilities to eavesdrop.

Interstate/Multi-State Phone Calls

Telephone calls are routinely originated in one state and participated in by residents of another state. In conference call settings, multiple states (and even countries) could be participating in a telephone call which is subject to being recorded by one or more parties to the call. This presents some rather challenging legal scenarios when trying to evaluate whether a call may legally be recorded. A call from Pennsylvania to a person in New York involves the laws of both states. Which state’s laws apply and/or whether the law of each state must be adhered to are questions parties to a call are routinely faced with.

When it comes to insurance subrogation claims, investigation is key. Recorded statements are a routine staple of such investigation. Discovery rules around the country vary, but generally, investigation performed in anticipation of litigation can be privileged and exempt from discovery under the right circumstances. But too many claims professionals believe that anything they put in the claim file can be protected and need not be divulged. They are wrong. Many are refusing to provide copies of recorded statements to their insureds, thinking that such “work product” is protected and privileged. However, the laws of many states require a person taking a written statement to provide a copy of it to the person who made the statement. For example, Florida‘s § 92.33 does this and more. It not only requires a person taking a statement to give a true and correct copy to the person giving the statement, but it also requires providing a copy to such person at any time upon request. Failure to do so means the statement cannot be introduced in evidence. Such failure may also subject the person violating the statute to administrative penalties; and even bad faith liability.

In Kearney v. Salomon Smith Barney, Inc., 137 P.3d 914 (Cal. 2006), the California Supreme Court applied California wiretap law to a company located in Georgia that routinely recorded business phone calls with its clients in California. California law requires all party consent to record any telephone calls, while Georgia law requires only one-party consent. Applying California choice-of-law rules, the Court reasoned that the failure to apply California law would “impair California’s interest in protecting the degree of privacy afforded to California residents by California law more severely than the application of California law would impair any interests of the State of Georgia.”

When a telephone conversation is between parties who are in different states, it also increases the chance that federal law might apply.

Gary L. Wickert

In most cases, both state and federal laws may apply. State laws are enforced by your local police department and the state’s attorney office. Federal wiretapping laws are enforced by the FBI and U.S. Attorney’s office. It is a federal crime to wiretap or to use a machine to capture the communications of others without court approval, unless one of the parties has given their prior consent. This means that if you are initiating a recording on a call that you are participating in, the other party does not need to be notified that the call is being recorded. It is likewise a federal crime to use or disclose any information acquired by illegal wiretapping or electronic eavesdropping. Violations can result in imprisonment for not more than five years; fines up to $250,000 (up to $500,000 for organizations); in civil liability for damages, attorney’s fees and possibly punitive damages; in disciplinary action against any attorneys involved; and in suppression of any derivative evidence. Congress has created separate, but comparable, protective schemes for electronic mail (e-mail) and against the surreptitious use of telephone call monitoring practices such as pen registers and trap and trace devices. But state law must also be looked considered.

Even seemingly minor infractions can have consequences. On April 1, 2021, the Supreme Court of California allowed a class action against a California lender named LoanMe, Inc. to go forward. Unbelievably, the entire case arose out of a very brief phone conversation. LoanMe extended a loan to the wife of plaintiff Jeremiah Smith. In October of 2015, a LoanMe employee called a phone number Smith’s wife had provided. Smith answered, on what he asserts was a cordless phone. Smith advised the LoanMe representative that his wife was not at home. The call then ended, 18 seconds after it began. LoanMe recorded the call. Three seconds into the call, LoanMe caused a “beep” tone to sound. The LoanMe representative on the call did not orally advise plaintiff that the call was being recorded.

In September of 2016, Smith hired a lawyer who filed suit on behalf of a putative class consisting of “all persons in California whose inbound and outbound telephone conversations involving their cellular or cordless telephones were recorded without their consent by LoanMe or its agent/s within the one year prior to the filing of this action.” The complaint alleged that the recording of these calls violated California law. The trial court dismissed the case, ruling that the “beep” gave Smith sufficient notice that the call was being recorded. On appeal, the Court of Appeals took a different tack, ruling that California law prohibits only third-party eavesdroppers from intentionally recording telephonic communications. They held that it did not prohibit participants in a phone call from recording the call. Interestingly, the Court of Appeals ruling was the first published opinion by a California appellate court to have specifically addressed whether § 632.7 applies to the intentional recording of a communication by a party. On appeal, the California Supreme Court reversed, and allowed the class action to go forward. In Smith v. LoanMe, Inc., 2021 WL 1217873 (Cal. 2021), the court said that the law is a general prohibition against the intentional recording of a covered communication without the consent of all parties, regardless of whether the recording is performed by a party to the communication or by someone else. Under California law, the potential damages in the case are $5,000 per call that is improperly monitored.

Claims professionals and investigators who record statements and phone calls should take effort to get permission of the other party before they start recording the call. Businesses should remember that all organizations who record calls (incoming or outgoing) should immediately alert all parties to the call if it is being recorded. Some companies could offer a non-recorded line available by pressing “1” or something similar. It is also important to have the recording start after the announcement of the call being recorded, and not before.

For businesses who have a recording which says, “This call may be monitored or recorded for quality assurance and training purposes”, should be aware that “recording” and “monitoring” are different things. Recording is self-explanatory. But “monitoring” includes things such as:

  • Listening: When a manager can only hear what is going on. Essentially, he or she is eavesdropping on a customer call.
  • Whispering: This occurs when a manager listens to the conversation and can provide feedback to the employee on the call in real time.
  • Barging: This is when a manager is asked to join a call to support the employee on the call.

All three functions are considered “monitoring.” What’s more, when insurance companies are involved, quite frequently Protected Health Information (PHI), Electronic Health Records (EHR), and even Payment Card Industry Data Security Standards (PCI) may be involved. PCI and PHI compliance rules and regulations apply to call recordings. As a result, there are many ways in which an individual claims handler or an entire company can slip up and find themselves with multiple infractions and violations. Just ask Wells Fargo.

For more information on the laws in all 50 states regarding the recording of phone conversations, see our chart found HERE.

About Gary L. Wickert and Lee R. Wickert, Matthiesen, Wickert & Lehrer, S.C.

Wickert is an insurance trial lawyer and a partner with Matthiesen, Wickert & Lehrer, S.C., and is regarded as one of the world’s leading experts on insurance subrogation. He is the author of several subrogation books and legal treatises and is a national and international speaker and lecturer on subrogation and motivational topics. He can be reached at

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