Summary
State Law Claims Against the Use of AI in the Financial Sector
In Turner v. Nuance Commc'ns, Inc., 735 F. Supp. 3d 1169 (N.D. Cal. 2024) and Gladstone v. Amazon Web Servs., Inc., 739 F. Supp. 3d 846 (W.D. Wash. 2024), plaintiffs claimed that AI use by their banks violated the California Invasion of Privacy Act. In Turner, AI recorded bank customer calls for voice authentication and fraud prevention. In Gladstone, AI analyzed customer voice recordings for sentiment, response time, etc. to provide personalized service.
Plaintiffs in both actions claimed that they expected their calls with the bank representative to be confidential, and not be tapped by AI without their knowledge or consent. Plaintiffs sued the AI service providers under the California Penal Code ' 631(a), which prohibits tapping of phone calls between parties without their consent, and ' 632(a), which forbids eavesdropping or recording of confidential communications. In Turner, plaintiffs also alleged violation of ' 637(3) of the California Penal Code that bars nonconsensual scrutiny of voice patterns to authenticate the speaker's statements.
Both the Turner and the Gladstone courts refused to dismiss the cases. Per the Turner court, whether plaintiffs' consent to the bank to record phone conversations extended to a third-party AI service presented "a factual dispute which is not...
