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We have many clients that have signed on to some of these relatively new vendors in the home improvement space that provide the ability to record sales representative conduct in the home. And a number of our clients have been quite pleased with the results. The problem, as is almost always the case in our industry, is that very few people seem to really understand the issues that are in play here.
First, as we know, there are “one-party” consent states and “two-party” consent states. In other words, in a one-party state, I can record a conversation I’m having with Joe, because I am aware of it. But remember that the contractor is not really a party to the conversation in the home – the parties to the conversation will be the consumer and the sales representative. This means that in a one-party state, the sales representative must have agreed to the use of the recording software. In your handbook, employment agreement, or some side document, you want to make sure the sales representatives have acknowledged and agreed that for quality control processes, their conduct in the home may be subject to recordation software.
So in a one-party state, we do not need to notify or obtain the authorization of the consumer. Of course, the optics of recording somebody in their home without their knowledge are poor if the fact is later discovered. And optics in our industry are disproportionately important. Something to keep in mind.
Continuing the example of my conversation with Joe, in a two-party state, Joe would need to be aware of the fact that I am recording the conversation. Moreover, if I’m communicating with both Joe and Sally, they both need to be aware of the fact that I am recording the conversation. So in reality, a “two-party” consent state is it actually an “all-party” consent state. This means that in a two-party state you would need the customer’s authorization or implied consent before engaging in the recordation process. We believe the best way to obtain that consent is when you are setting the lead, making sure the script discloses that a recording-based quality control process may be used when the representative comes to the customer’s home, and ensuring that that telephone call itself is recorded so we have proof that we have obtained the consent. For example:
Mrs. Jones, we are looking forward to seeing you tomorrow to discuss your window needs. Before I let you go, however, I want to let you know that for quality control purposes, we use an in-home program during our demonstrations that makes a record of our worker’s communications with you. We always want to make sure that you’re treated properly and fairly, and I just wanted to make sure that was OK with you.
It is also possible to add this type of “recording disclosure” to the telemarketing authorization as part of the form-fill or lead generation material in the first place.
The other problem, which everyone seems oblivious to, is what happens if another resident of the home shows up during the demo. For example, what if you obtain the consent of the wife when you are generating or setting the lead, and then the husband shows up during the demo? Or what happens if their daughter from college is home on vacation and walks in and sits down on the couch during the demo? There appears to be no operational solution to this problem because one person cannot provide recordation consent for another person (and keep in mind that violating recordation laws in many states is often a criminal misdemeanor).
A collateral problem is that even if we do obtain the consent of the consumer as to the use of the recordation software, the consumer has not been made aware that they are also being recorded by the provider of that software. That information could be added into the script disclosure, of course, but now you are starting to get into a lot of disclosures.
A further area of concern is whether the demo could elicit personally identifiable information on the consumer that would trigger consumer data and privacy laws. That will depend on whether the demo intentionally or unintentionally goes into financing discussions or even solicits information about employment, credit or prior bankruptcy, etc. How do you can constrain those discussions?
We are aware some of the vendors in this space are offering a “redaction option” where only the sales representative’s voice is being recorded, apparently using AI, and supposedly there are also features that eliminate the recordation of personal information in some manner. We are not sure who controls those options, how exactly they work, when the redaction takes place, or whether that personal information is still present somewhere, such as on the software provider’s servers. Our concern has been that a contractor will find themselves on the wrong end of an invasion of privacy or consumer data protection lawsuit as a result.
Before signing up with one of these vendors, you may want to make sure that you’re being indemnified for these issues. Sooner or later, somebody’s going to have a very serious problem, ending up either in litigation or an attorney general investigation as a result of this practice. The legal implications can be handled (at a cost) but also consider that the PR blowback from a nighttime news report could be even more severe.
Berenson LLP serves as counsel to the remodeling and home improvement industry, providing legal compliance solutions, quality control counseling, litigation defense, and agency representation to industry clients throughout the United States. This client alert is intended to provide general information regarding industry legal issues and developments to our clients and other friends. It should not be construed as legal advice or a legal opinion on any specific facts or situations. For further information on your own situation, we encourage you to contact an attorney at the firm. For more information on the legal solutions provided by Berenson LLP, please contact us by phone at 561.429.4496 or by email at info@berensonLLP.com.
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