Administering Call Recording Class Action Settlements

Federal Law requires that at least one party taking part in a call must be notified of the recording (18 U.S.C. 2511(2)(d)). Similarly, most states’ call recording laws require only one person to be aware of the recording. However, a minority of states require both or all parties to give consent to the call recording. For example, California requires that all parties to a conversation must consent to being recorded or the recorder may face potential criminal and civil liability. California Penal Code 632 broadly defines a recording, and virtually any type of electronic technology which allows the listener to record a conversation between two or more persons will fall under this law.

Therefore, under California law, when companies electronically record conversations with California residents without their consent, such companies can face call recording class action lawsuits.

The Challenge

Kroll Settlement Administration is experienced in administering call recording class action settlements. These settlements are typically common fund settlements, meaning the defendant pays a total settlement fund amount. The defendant maintains a record of how many unique phone numbers were called and how many times each unique phone number was called. Once the claim period closes, Kroll uses this information to calculate the per call value for claimants by dividing the total number of phone calls placed to claimants into the net settlement amount. For example, if the per call value amount is $500 and a claimant received 30 phone calls, that claimant receives $15,000 for their claim. When fewer claims are filed with fewer phones calls, the per call value increases. Therefore, call recording settlements can often result in large payments to those class members who file claims.

Administering Large Check Settlements

The recipient of a large check may be suspicious about its legitimacy. To assure class members of the checks’ legitimacy, Kroll recommends mailing a letter in advance of the settlement distribution to alert class members that their check will be arriving soon. The letter includes class counsel’s contact information and Kroll’s contact information, the settlement website URL and our toll-free phone number for class members to contact Kroll with their questions or concerns. In addition, prior to sending checks, Kroll recommends placing outbound phone calls to class members who will be sent large checks, again to assure them of its legitimacy, give them an opportunity to ask questions and importantly to confirm that the address on file is still correct. Rather than using regular first-class mail, Kroll often sends these large checks via USPS Priority Mail and/or FedEx. Requiring or waiving signature depends on each class member’s expressed preference.

When sending large settlement checks, additional steps should be taken to increase the likelihood that such checks are able to be cashed. It's important to be aware that class members without a bank account may have trouble cashing large checks. Check cashing companies may refuse to cash such checks in fear of illegitimacy. Also, class members receiving large checks sometimes ask whether their payments are taxable. Kroll does not offer tax advice, and these class members are advised to ask an accountant.

The Results

In a recent call recording case administered by Kroll, the per call value amount was over $850 per call, the average settlement payment amount per valid claimant was over $4,300, and 46 class members received payments of $10,000 or more. Prior to the distribution of the settlement to all valid claimants, Kroll mailed a letter to each of the 46 class members who were to receive over $10,000. Kroll’s letter informed them that a check would be mailed soon and confirmed the check’s value. The letter contained contact information both for class counsel and for Kroll, including phone numbers and email addresses, plus the settlement website URL.

Additionally, class counsel and Kroll conducted an outbound calling campaign to all class members set to receive payments of $10,000 or more. Class counsel called the 15 class members whose check amounts were over $20,000, while Kroll called the other 31 class members with check amounts between $10,000 and $19,999. Kroll’s outbound calling team successfully spoke with 28 of these 31 class members and left voicemails for the other 3 class members.

As a result of these efforts, of the 588 checks Kroll issued to class members, 96% of those checks were cashed (564). In addition, Kroll successfully distributed over 97% of the net settlement fund to class members.