“The Tip of the Iceberg”: Analysts React to the Contact Center AI Lawsuit Against Patagonia

The lawsuit has raised several uncomfortable questions for many CCaaS providers (and their customers)

5
“The Tip of the Iceberg”: Analysts React to the Contact Center AI Lawsuit Against Patagonia
Contact CentreNews Analysis

Published: July 22, 2024

Charlie Mitchell

Last week, Michelle Gills of Willits, California, filed a lawsuit against Patagonia for leveraging Talkdesk’s contact center AI tools.

The AI tools – which include Talkdesk Customer Experience Analytics, Quality Management, and Agent Assist – are nothing new, with most other big-name CCaaS providers offering similar solutions.

Crucially, however, Gills claims that – without her knowledge or consent – Talkdesk leverages these tools to “intercept, listen to, record, and use the contents of the call.”

Instead, she expected Patagonia – a global clothing retailer – to keep her conversations confidential.

As such, Gills submitted the Class Action Complaint, accusing Patagonia of two violations of the California Invasion of Privacy Act, an invasion of privacy under California’s constitution, and an intrusion upon seclusion.

CX Today revealed the news last week. Yet, now CX analysts have digested the case, several have shared their thoughts on how the lawsuit – and the potential for others – could change the nature of CCaaS vendor-customer relationships forever.

→ THE LAWSUIT: Read the lawsuit here.

A Ginormous Wake-Up Call for CCaaS Vendors

Talkdesk and many other CCaaS vendors use the content of their customers’ calls to train their AI. That’s no industry secret. After all, many market their AI models on how many millions (or billions) of customer conversations have trained them.

Several CX analysts – like Liz Miller, VP & Principal Analyst at Constellation Research – have long taken issue with this. At industry events, they’ve asked vendors: “What do you mean it’s your data being used to train the AI?”

Their response: “Our customers opt-in.”

While that might be true, in California – alongside Europe, thanks to GDPR – it’s not all about the customer; it’s also about their customer’s customers and their right to say no.

Noting this, Miller said: “For a lot of these vendors, this lawsuit should be a ginormous wake-up call.

They’ve got to stop thinking that, just because someone filled out a form and then hit submit, they can use that data to train their AI. That’s just not how it works.

Indeed, these CCaaS providers must now consider: how many of our customers are going to get sued? Because Talkdesk didn’t get sued, its customer did.

End-Users: Start Asking Your CCaaS Vendors Some Uncomfortable Questions

Overall, this is a nuanced lawsuit. But, in itself, it won’t necessarily put the onus on regulators to create new policies that guide the actions of CX tech providers.

What it may start to do, however, is influence the way brands and vendors work together to ensure the former has a sufficient layer of transparency.

“It has to put a requirement on someone – maybe Debbie and Bob from risk and compliance – to have a very uncomfortable conversation with their vendors,” said Miller.

It puts the onus on where it should have always been: on the buyer and the seller to ask those hard questions.

Rebecca Wetteman, CEO & Principal Analyst at Valoir, agreed, stating: “We’re going to see more lawsuits like this… I think it’s just the tip of the iceberg.”

She also warns that an IVR message – such as “the call is being recorded for training purposes” – will not be enough to protect end-users, as the California legislation dives much deeper.

Indeed, those end-users may also have to include information such as where the contact data is being rerouted, whether it’s being held at a different site, and so on. All in all, that will likely result in a long and somewhat confronting in-queue message for consumers to listen to.

CCaaS Vendors: Urgently Review Your Customer Testimonials!

As the Patagonia lawsuit does the rounds, CCaaS providers must prepare to engage in those difficult discussions, ensuring a uniform, carefully considered response.

Yet, first things first, vendors should sweep their websites, reconsider any materials that may give ammunition to such cases, and protect their customers.

After all, in the lawsuit, the plaintiff points to a case study on Talkdesk’s website and references the retailer’s Senior Manager of Customer Experience Operations by name.

Recognizing this, John Walter, President of the Contact Center AI Association, urges caution in developing and hosting similar content.

“I have been warning contact center leaders for months to be very careful about providing public testimonials for AI vendors,” he wrote on LinkedIn.

Plaintiff lawyers are aggressively pursuing data privacy and wiretapping claims surrounding the use of AI in customer support. They are finding their targets through public testimonials.

This time, the target – in Patagonia – is a brand with a reputation for doing right in the world, and it’s likely shocked by this lawsuit.

Yet, it may be hard to plead ignorance in court, as how Talkdesk trains its models would have likely been a big part of the vendor’s sales pitch.

Don’t Dismiss This… There’s Precedent

Just because someone files a lawsuit, it doesn’t mean that the defendant – in this case, Patagonia – is liable.

Yet, while this is still relatively uncharted territory, there is precedent – in California – of defendants paying a heavy price in a somewhat similar case.

In 2019, Hanna Andersson and Salesforce got sued for a data breach under the California Consumer Protection Act (CCPA).

During that case, the lawsuit alleged that the breach was caused by Hanna Andersson’s and Salesforce’s “negligent and/or careless acts and omissions and failure to protect customer’s data.”

Ultimately, Hanna Andersson and Salesforce agreed to pay $400k to resolve the suit.

Meanwhile, in May, Plaintiff Avner Paulino — a credit union member — filed a lawsuit in California against the Navy Federal Credit Union and Verint.

The lawsuit claims that the Navy Federal Credit Union allows its customer service calls to be “tapped” by a third party (Verint) without its consumers’ knowledge or consent.

Moreover, Paulino wants to represent all California residents who called a company – or received a call from a company – using Verint’s Real-Time Agent Assist or Speech Analytics services and did not consent to Verint intercepting, listening, or recording the call.

Interestingly, this case came a little more than a month after Verint released a video testimonial showcasing its work with the union.

Nevertheless, while these examples sue the vendor and the suit against Patagonia doesn’t, they offer a stark reminder to CCaaS providers that they must review the California Privacy Act (and GDPR).

In doing so, they must consider the repercussions for marketing, sales, and product development teams, as well as customers.

If not, it may only be a matter of time until a plucky plaintiff takes a stance against your business.

More Insight Into Big CX News Stories

The insight featured in this article from Miller and Wetteman comes from an upcoming edition of CX Today’s Big News Show.

In the episode, they – and other expert analysts – share more takes on this and other trending CX stories, covering news from Five9, HubSpot, and Salesforce.

Don’t want to miss it? Then subscribe to the CX Today Newsletter here: www.cxtoday.com/account/

 

 

Agent AssistArtificial IntelligenceCCaaSCommunity NewsVirtual AgentVirtual Assistant

Speakers

Brands mentioned in this article.

Featured

Share This Post