What Happened?

The outdoor sporting goods company Bass Pro recently agreed to pay $6 million to settle claims that it violated California privacy laws. Specifically, Bass Pro faced a potential class action lawsuit over claims that it recorded telephone calls between consumers and the company’s customer service representatives without first obtaining the consumers’ consent.

The California “Eavesdropping” Law

Under California Penal Code Section 632, a company is prohibited from intentionally recording a confidential communication without obtaining the consent of all parties to the communication. Under a separate provision of California law, businesses are prohibited from recording mobile telephone calls unless all parties to the call have consented. The law authorizes statutory damages of up to $5,000 per recorded communication, as well as injunctive relief.

The Case

In the case against Bass Pro, McDonald v. Bass Pro Outdoor World, a Bass Pro consumer named Geoffrey McDonald claimed that Bass Pro recorded one or more of his telephone calls with the company’s customer service representatives without first obtaining his consent, including some calls in which he provided credit card information to the company. McDonald also alleged that, during the 12 months preceding his filing the complaint, the company routinely recorded incoming and outgoing telephone calls with customers without providing notice that the calls were being recorded. McDonald sought class certification for 30,000 individuals who were identified as having called the company during the relevant time period.

The Context

The settlement is a costly reminder of the perils that state consumer protection statutes present to retailers. Despite the absence of action in Washington, more and more states are passing laws directed at restricting the type of information companies can collect and maintain on consumers. In addition to the Eavesdropping Law, California is one of several states that prohibit companies from collecting more information than is necessary during the course of a credit card transaction, and the state has passed a series of laws aimed at forcing companies to disclose their online data collection and use practices. Retailers that do business in multiple states should be sure that they are well-versed in state consumer protection laws and particularly in the variation between those laws from state to state.