Wells Fargo, Fifth Third Bank Accused of Allowing Secret Call Recording by Telemarketers

A group of small California businesses has filed a secret call recording lawsuit against banks and telemarketers.

According to the lawsuit, telemarketing companies International Payment Services LLC and Ironwood Financial LLC allegedly called businesses throughout the United States to ask about each merchant’s credit and debit card sales volume.

The calls were allegedly made on behalf of Wells Fargo Bank NA and Fifth Third Bank. Merchants claim the calls were recorded without their permission or knowledge, a violation of California’s Invasion of Privacy Act.

According to the secret call recording lawsuit, merchants must have a relationship with a bank that is a member of the Visa and MasterCard systems in order to accept payment by customers who wish to pay using a Visa or MasterCard. These banks, known as “acquiring banks,” process all the credit and debit card transactions for a merchant in exchange for a percentage fee of each transaction.

Banks compete with each other for merchants because the more transactions an acquiring bank processes, the more fees the bank collects. Defendants Wells Fargo and Fifth Third are both acquiring banks.

Banks hire third party sales agents such as telemarketing firms to solicit merchants on behalf of the acquiring bank in exchange for a portion of the bank’s processing fees.

The secret call recording lawsuit alleges that the telemarketing calls were recorded without any disclosure to the recipients of the calls, which means the California businesses did not provide their consent to be recorded.

Wells Fargo tried to argue that its contracts with telemarketing companies required the telemarketers to obey the law, which allegedly let Wells Fargo off the hook. U.S. District Judge Rebecca R. Pallmeyer said that excuse didn’t fly because the bank was in a position of authority over the telemarketing firms it hired.

The secret call recording lawsuit claims that Wells Fargo reviewed and approved the telemarketers’ script, which did not indicate the telemarketer should say anything about the call being recorded.

At least one of the telemarketers allegedly participated in caller ID spoofing, which made the incoming call appear to be from a local customer rather than from an out of state telemarketer. Caller ID spoofing tricks the merchant’s caller ID program by masking the caller’s real phone number and displaying a fake local phone number in its place.

“Because of this practice, Plaintiffs and class members had no idea they were receiving a telemarketing call until recording had already begun,” says the secret call recording lawsuit.

The Secret Call Recording Lawsuit is Case No. 1:16-cv-11223, in the U.S. District Court for the Northern District of Illinois.

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