Navigating Federal and State Call Recording Laws for Debt Collectors

Navigating Federal and State Call Recording Laws for Debt Collectors

Each year, the California Association of Collectors (CAC) provides insight to debt collection professionals through a series of educational courses.

They touched on topics ranging from responding to disputes to tips for creating compliant collection letters, to best practices for handling call baiting.

PDCflow has partnered with the California Association of Collectors (CAC) in the past to cover many operational concerns for debt collection agencies.

In 2018, PDCflow partnered to cover a CAC-hosted webinar with panelists attorney David J. Kaminski, and agency owners Shawn Suhr, CEO of Continental Credit Control and Courtney Reynaud, President of Creditors Bureau USA.

The subject was phone call recording laws for debt collection.

Kaminski, partner at Carlson & Messer LLP, a Los Angeles-based civil litigation firm, that focuses its practice on defending the entire financial services sector, took the lead in discussing call recording.

Throughout the webinar, he reviewed both federal recording laws and state call recording laws, with special attention to the particularly stringent California call recording laws.

Here’s an overview of the regulations that exist:

Federal and State Call Recording Laws Overview

Adhering to laws while call recording can become complicated. To record a telephone conversation is not per se illegal in any jurisdiction, but it can become illegal if the proper consent is not obtained.

Consent is a key concept under all call recording laws. Both federal and state guidelines govern the practice, and each state has different guidelines for the circumstances under which it is legal to record a debt collection telephone call.


There is a federal call recording law in place, governed by the Electronic Communications Privacy Act of 1986.

It’s important to understand that this is a one-party consent law. Meaning, only one party to the conversation must give permission to record a conversation to ensure it is legal.

However, Kaminski warns that if you are not one of the parties involved (for instance, in a two-party conversation), be wary.

If “a third party seeks to intercept that conversation without consent from one of the parties thereto, there can be potential liability under this federal recording law.”


On top of the federal regulation, there are 13 states that require two-party consent (where all parties to the conversation must consent) to legally record a call. Those states include: CA, CT, DE, FL, IL, MD, MA, MI, MT, NH, NV, PA, WA.

Of all the two-party consent states, California’s telephone recording law provides for $5,000 per violation in Penal Code 637.2.

Each state’s call recording laws are different, so it’s important to speak to your agency’s attorney to ensure your current call recording practices are compliant.

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What is CIPA?

California’s call recording law is formally known as The California Invasion of Privacy Act (CIPA) and it is one of the most precarious call recording laws.

It is also important to note that CIPA considers numerous situations which involve individuals’ privacy rights in regard to technology. The information provided here is not a comprehensive look at CIPA and focuses only on the call recording laws.

While federal recording laws require only one party to give consent to recording of a conversation, California is one of many states that requires two-party consent, where all those involved in the conversation must consent to the recording.

Basic Call Recording Components of CIPA
  • CIPA distinguishes between calls to/from a landline and calls to/from a cell phone.
  • The recording of a confidential call to a landline phone is illegal without consent of all parties to the conversation. (Cal. Penal Code § 632)
  • The recording of any cell phone call is illegal without consent of all parties to the conversation (no confidentiality requirement). (Cal. Penal Code § 632.7)]

“The legislature thought that analog signals back in the late ‘80s and early ‘90s could be easily intercepted,” Kaminski explains.

This history suggests the rule was only intended to apply to third-parties. This may have been the original aim, but that isn’t how the law has been interpreted. Most court decisions have held that the law applies to two-party conversations.

What Does the Plaintiff Have to Prove?

There are several elements of a CIPA claim that a plaintiff must prove during litigation:

  • That the defendant intentionally recorded the conversation by using an electronic device.
  • Plaintiff had a reasonable expectation that the conversation was not being recorded - Kaminski noted that “if someone knew or should have known [you were recording the conversation], you may have an argument that there should be no liability under the law.”

    For example, if you gave the plaintiff a prior recording warning in the days before the call, this could potentially help you defend yourself against their claims.

    • That the defendant did not have the consent of all parties to the conversation to record it - If the plaintiff remains silent or does not stop a conversation after being notified that they are being recorded, this may be considered to give rise to implied consent. Ensuring that you clearly notify all persons on the call, at the outset of that call, that it is being recorded can help to minimize the risks of claims of illegal call recording.

    Express Consent Legal Definition

    There is a difference in the courts between “express consent” and “implied consent.” The CIPA does not require express consent. Express consent requires that all parties must actually state their consent.

    Implied consent requires only that they don’t specifically object to being recorded. Kaminski says that most California courts have found implied consent to be a satisfactory form of consent to call recording.

    Implied Consent Legal Definition

    If the plaintiff seeks damages:

    1. It must be proved that the plaintiff was harmed.
    2. Plaintiff must show that the defendant’s conduct was a substantial factor in causing said harm.

    California Call Recording Laws: Statute of Limitations

    The statute of limitations for a call recording violation is one year. However, it is subject to California’s discovery rule. Kaminski explains this discovery rule through the citation of Ion Equip. Corp. v. Nelson, 110 Cal. App. 3d 868, 880 (1980).

    This case established that under the right circumstances, if a call recording of a conversation is discovered even years after the conversation took place, the statute could begin with discovery of the recording — not on the date the parties spoke.

    California Call Recording Laws: Statutory Damages

    Those who have violated CIPA may face both criminal and civil liability components.

    Criminal liability is not often enforced during call recording lawsuits (as it pertains mostly to instances of intentional illegal surveillance). The potential for financial harm coming from rather severe civil damages, however, should be enough to convince your collection agency to obtain consent during every call.

    The damages provided under 637.2 are $5,000 per violation.

    Basic Tenets of CIPA - California Call Recording Laws

    How to Establish Call Recording Consent

    Due to several court cases (Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95, 118 (2006); see also Maghen v. Quicken Loans, Inc.), it is generally accepted if a business notifies all parties at the outset of a call that the call is being recorded, this action may fulfill the statutory consent requirement.

    Unfortunately, the courts haven't yet fully decided what constitutes the ‘outset’ of a call. Some argue that outset is defined as before the non-recording party speaks.

    To mitigate the risks of litigation, your agency should consider creating a policy or procedure in your compliance management system that ensures your collectors (or an automatic recording notification) informs all parties of the call recording at the earliest point possible.

    Showing a prior awareness that the call would be recorded can also establish consent. This can be done through means such as prior conversations with the parties involved where notice about recorded calls was provided.

    If an agent somehow neglects to mention call recording during a particular call, but the other party was given prior notification of such recording, their participation may possibly indicate that they still consent to the current conversation being recorded.

    While this prior notice can help you potentially defend a case in court, Reynaud points out it can still become “a pretty expensive mistake.” Although you may win a court decision due to prior notice, your agency must still bear the expense of legal fees to prove you were in the right.

    To avoid allegations of violation in the first place, Reynaud has long been an advocate that “On a recorded line is your middle name.”

    Kaminski states that companies should stress to their agents how important call recording notifications are.

    If you teach them to view the notice as part of their own name, (Ex. “this is Jim Smith on a Recorded line, is Jenny available”), they’ll say it every opportunity required, decreasing your agency’s risk of having to fight the issue in court.

    Also critical is to consider an inbound call recording warning that consumers cannot bypass.

    As with all legal matters, though, be sure to consult your agency’s attorney for legal advice regarding the most appropriate way to establish call recording consent within your business.

    Phone Call Recording Laws for Out of State Consumers

    If an agency based out of a one-party consent state records a conversation with a California resident, it is important to know that CIPA laws still apply.

    In fact, keeping track of state call recording laws can become complicated, and you may not even know where an individual is currently residing if you are contacting them on a mobile phone.

    To simplify matters and keep your agency covered, it is safest to follow two-party consent practices if you do business across state lines.

    Suhr points out that failing to give this warning to consumers within your state can open you up to potential liability exposure.

    Improper call recording notification could create a class of individuals who may file suit against your agency. And with no cap on class action damages — as shown above — this could be a business-ending mistake.

    Call Recording Laws: Takeaways from Recent Case Law

    A number of cases (Raffin v. Medicredit, Inc., Zaklit v. Nationstar) have left Kaminski with a few thoughts:

    • Takeaway 1 - Liability under the CIPA is broad. Based on the current state of the law, it is best to give a recording advisory before your consumer speaks to avoid litigation.
    • Takeaway 2 - The consent to record issue can cause “individual issues” that predominate a class — GOOD FOR DEFENSE.

    Meaning, if you can establish that there are so many individual issues with regard to the issue of consent, i.e., who consented and who did not, because the company had a recording warning protocol in place, including prior call recording notification, that may help you defend a class-action suit.

    The bottom line?

    “You should have written policies and procedures that you follow,” says Suhr. “And you want to try to get that call record warning out in as many different types of communication as possible.”

    Kaminski notes that providing a call recording warning notification in written communications to consumers can also help pave the way for multiple defenses to CIPA individual and class action claims.

    It is imperative to train your collection agents and maintain written policies and procedures. After all, strict, compliant measures while running your collection agency’s day-to-day operations are the best (and most cost-effective) defense against litigation.

    Moving from Phone Calls to Digital Channels

    Since Regulation F’s implementation, digital communication has become an expected — almost essential — part of the standard debt collection strategy.

    Debt collectors see more positive impacts from email and SMS communications — from higher engagement rates to faster account resolutions.

    In this 3-minute video, Justin Franklin of Cedar Financial discusses the positive impact of digital communication strategies for his agency, Cedar Financial.
    Watch Full Interview

    What is the revenue impact of digital communications for agencies?

    Letters and phone calls (due to call blocking) are no longer effective and the operational cost is significantly higher.

    Agencies collect more through digital communication channels. One PDCflow client who recently implemented SMS has seen these results in as little as one month after implementation:

    • 24% increase in total payments
    • 55% increase in total payment amounts
    • 26% increase in average payment amounts

    PDCflow for Flexible Digital Communications and Payments

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    Use our pre-approved messaging to get started quickly with email and SMS, without the extra cost, waiting to be approved by phone carriers, or worry of messages being blocked.

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    Businesses can have more control over messaging and branding. Integrate to our customizable Flow and SMS texting APIs — which allow white labeling — so your business can choose the messages you send to customers and brand the entire process for a seamless experience.

    Set up a call with a PDCflow Payment and Communication expert today to learn more.

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    Hannah Huerta - PDCflow Marketing Specialist
    Hannah Huerta, Marketing Specialist

    Hannah Huerta is a Marketing Specialist at PDCflow. She creates content for the accounts receivable and payment industry.

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