Judge rules Sallie Mae contractor must face secret recording lawsuit

By: The VNN Team  //  News Briefs, US News

by Carol Thompson

A California federal judge on Monday refused to dismiss a proposed class action accusing a Sallie Mae Inc. contractor of surreptitiously recording phone calls with consumers as part of its student debt collection business, rejecting arguments that the recordings would only have constituted eavesdropping if an unaffiliated third party had also been listening.

Houston-based GC Services LP routinely obtains highly personal or confidential information from consumers before revealing that a call is being recorded, or fails to disclose this fact at all in violation of California’s Invasion of Privacy Act and California penal law, according to a complaint filed by Roederick Montemayor. In his original complaint, Montemayor alleged that on more than one occasion he disclosed personal information prior to being advised the call was being recorded.

GC Services argued that no CIPA violations arise from GC Services monitoring or recording its own call center activity in the ordinary course of its own business. “Defendant maintains California courts interpret California Penal Code section 632 “eavesdropping” to refer to a third party listening to a conversation between two other parties. Defendants further maintains Plaintiff does not allege that anyone other than GC Services employees listened to the telephone calls between him and GC services. Because no third party listened in on the conversations between Plaintiff and Defendant, Defendant argues, the call monitoring cannot constitute eavesdropping and cannot violate CIPA as a matter of law.”

Surreptitious call recording is a growing concern among consumers. As VNN reported Sept. 10, Southwest Airlines is facing a similar lawsuit. That case also alleges that a Southwest Airlines representative secretly recorded telephone calls.

While Sallie Mae is not named in the lawsuit, the student loan lender has not been without problems. In May Sallie Mae was ordered to pay nearly $100 million in restitution and penalties for “unfair and deceptive” practices related to student loans and for violating the legal rights of members of the military, according to legal action announced by the Justice Department and the Federal Deposit Insurance Corporation.

Sallie Mae recently separated into two companies–Sallie Mae Bank and Navient Solutions.

Image: Occupy Student Debt Campaign/Flickr