A newly filed class action lawsuit in California is raising the stakes for businesses that use artificial intelligence to monitor or analyze customer service calls. The plaintiff in Galanter v. Cresta Intelligence alleges that the AI vendor captured, transcribed, and analyzed her call without sufficient notice or consent, violating California’s strict privacy laws. Importantly, the case targets not only the recording of the call itself, but also the vendor’s potential to use the data for training AI models and product development—highlighting a broader legal theory that AI capabilities alone may constitute a violation.
The case underscores a significant compliance risk: even if businesses themselves aren’t storing or analyzing call data, they may still face liability if third-party AI vendors use or have access to that information. California’s Invasion of Privacy Act (“CIPA”) requires all-party consent to record communications, and courts have increasingly allowed similar lawsuits to proceed. Vague disclaimers like “calls may be monitored for quality purposes” may no longer be enough, especially when data is used for more than quality assurance. Plaintiffs are also arguing that proof of actual data misuse isn’t necessary—only the vendor’s capability to use the data is enough to bring a claim.
To reduce exposure, businesses using AI-powered tools should audit their vendors, strengthen disclosure language, amend contracts to restrict third-party data usage, and train staff on compliance risks. With lawsuits on the rise and potential damages mounting, businesses—especially those operating in states with all-party consent laws—should act now to ensure their AI practices align with evolving privacy standards.
If your company uses AI to monitor employee or customer communications, contact us at info@mnklawyers.com to evaluate your legal risk.
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