Navy Federal Credit Union is currently facing a class action lawsuit over its use of artificial intelligence (AI) technology to monitor customer calls (see, Paulino v. Navy Federal Credit Union et al., case number 3:24-cv-03298, in the U.S. District Court for the Northern District of California). The lawsuit alleges that Navy Federal has been allowing Verint, an AI software company, to intercept, analyze, and record all customer calls without proper disclosure to or consent from the customers.

Importance of Legal Issues for Companies Using AI

The legal issues highlighted in this lawsuit are critical for any company using AI to record and analyze phone calls. Call recording for quality assurance and training purposes is a common practice among businesses. However, the integration of AI into this process introduces new complexities that require careful legal consideration. The use of AI to intercept and analyze calls can expose companies to significant legal risks, especially concerning customer privacy and consent.

Widespread Practice and New Legal Challenges

Call recording is widely used by companies to improve customer service and ensure compliance with regulatory standards. Typically, customers are informed that calls may be recorded for quality assurance purposes. This practice generally suggests internal use of the recordings by the company. However, when AI technology, such as Verint’s Real-Time Agent Assist and Speech Analytics, is used, the scope of call monitoring extends beyond traditional recording. The AI not only assists in real-time but also analyzes and potentially uses the data for its own development.

Need for Comprehensive Disclosures

The adoption of AI for call monitoring necessitates more comprehensive disclosures to customers. Businesses must ensure that callers are explicitly informed at the beginning of a call about the involvement of AI and any third parties, such as Verint, in recording and analyzing their conversations. This transparency is crucial to obtaining informed consent and maintaining customer trust.

Case Summary

According to the lawsuit, Navy Federal customers were unaware that their calls were being intercepted and analyzed by Verint. Customers believed their conversations were confidential and solely between them and Navy Federal. The suit claims that Verint used the intercepted calls not only to assist Navy Federal but also to train its AI systems, without proper disclosure or consent. This lack of transparency could affect customer trust and willingness to engage in future communications, particularly when sensitive information such as social security numbers and bank details are involved.

Conclusion

The case of Paulino v. Navy Federal Credit Union et al. underscores the importance of adhering to data privacy laws and ethical standards in handling customer information. Companies using AI for call monitoring should review their current practices to ensure full compliance with legal requirements and transparent communication with customers. Ensuring clear notice and obtaining explicit consent are vital steps in mitigating potential liabilities and fostering a trustworthy business environment.

For further details or legal advice on this matter, please contact the attorney responsible for your account or, in the alternative, Jonathan S. Marashlian at jsm@commlawgroup.com.