Patagonia and Privacy – The Use of AI Powered Tools Leads to an Invasion of Privacy Lawsuit Due to the Alleged Collection of Customer Data

In a lawsuit filed earlier this month, plaintiffs have claimed that Patagonia, a company based out of Ventura, CA, violated California privacy law through the company’s partnership with Talkdesk, an artificial intelligence company. The plaintiffs alleged that customer communications were being recorded and analyzed without customer permission.

According to its website, Talkdesk is a “generative AI-powered CX platform” with AI offerings that will deliver an exceptional customer experience.[1] The allegations claim that this service sends all communications through Talkdesk’s own servers and uses artificial intelligence to analyze customer feelings. It is also alleged that the data collected is used to enhance Talkdesk’s current products and services, and help create new products and services.

The California Invasion of Privacy Act states that a “person who, without the consent of all the parties to the communication, intercepts or receives and intentionally records, or assists in the interception or reception of and intentional recordation of” a telephone conversation, will be found liable. (Cal. Penal Code § 632.7(a).)

Plaintiffs alleged Patagonia violated the California Invasion of Privacy Act by intentionally installing Talkdesk products and services, knowing customer communications would be recorded. Additionally, not only were the conversations recorded, but the plaintiffs did not give their consent, either express or implied.

The lawsuit against Patagonia is not the first lawsuit of its kind, and it likely will not be the last. Earlier this year, in May, a similar lawsuit was filed against Navy Federal Credit Union alleging an AI-powered software intercepted, recorded, and assessed customer calls without receiving consent from the customers. Rebecca Wetteman, the CEO and Principal Analyst at Valoir, stated the lawsuit against Patagonia is “just the tip of the iceberg.”[2]

AI tools have grown in popularity over the past year as the technology continues to improve. The effectiveness of these tools largely depends on the data used to train them–meaning AI-powered tools will likely continue to collect user data to improve their service. Currently, California does not have formalized regulations regarding AI.

As this case, and other similar cases that may be filed, progress through the courts, privacy concerns of users whose data is being used for these products will continue to be a central issue. California has strong privacy related protections through both its state constitution and privacy related acts. Companies will need to follow these early lawsuits in order to make informed decisions on their use of AI powered communication tools in the future.