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Financial Services Law Insights and Observations

District Court approves $28 million class action settlement over recorded calls

Courts Privacy/Cyber Risk & Data Security Class Action Settlement

Courts

On August 16, the U.S. District Court for the Northern District of Illinois granted preliminary approval of a class action settlement, resolving allegations that a call center hired by a national bank and its merchant processing servicer (collectively, “defendants”) violated California’s Invasion of Privacy Act by recording calls without receiving customers’ permission. Class members, comprised of California businesses who did not sign a contract for merchant processing services with the servicer, filed suit against the defendants in 2016 claiming the call center placed sales appointment calls to the businesses without disclosing that the calls were being recorded. The defendants denied any liability or knowledge of the alleged conduct, and continued to maintain “that there was no principal-agent relationship with [the call center] and, even if there were such a relationship, [the call center] acted outside the scope of its authority by illegally recording calls.” The preliminarily approved settlement will require the defendants to pay $28 million, of which up to $5,000 will be paid for each eligible call that a class member received during the class period.