Rise In Wiretapping Litigation Should Prompt Dealers To Audit Their Data Tracking Tools

Dealerships, like many businesses in today's data-driven market, use various tracking technologies such as session replay software, cookies, pixels, chatbots, pen registers, geotargeting or geofencing tools, and other related technologies to collect, track, and store personal data from consumers when they visit the dealership's website. These tools and technologies are designed to enhance the user experience and improve dealers' marketing, but their use is becoming increasingly risky as consumers grow progressively more aware of how their personal data is being collected and used.

The past two years have brought an increase in class action litigation against auto dealers alleging that the use of these tools constitutes illegal wiretapping or unauthorized recording of consumer activities and communications without consent in violation of state wiretapping laws. It is important that Illinois automobile dealers, and Wisconsin dealers that service Illinois consumers, fully understand this growing trend and take the proper steps to minimize their risk.

Class Action Litigation under State Wiretapping Laws

Several recent cases involving California's Invasion of Privacy Act ("CIPA") highlight this trend. California is a so-called "two-party consent" state, and under the CIPA, any party seeking to record an audio or text-based conversation must obtain consent from all parties to be recorded, no matter where the other parties are located. The California plaintiffs filing these claims allege certain tracking tools on dealership websites, including cookies, session replay tools, or chat modules, violate state and federal wiretapping laws by tracking or recording interactions with consumers without their consent. California residents are filing these actions against dealers in states other than California, demonstrating this issue affects any dealership doing business with consumers located in a two-party consent state, regardless of that state's own wiretapping laws.

Like California, Illinois is a two-party consent state. It is increasingly likely that Illinois dealers, or dealers in Wisconsin that service Illinois consumers, could face similar litigation under the Illinois Eavesdropping Statute, 720 ILCS 5/14-1, et seq. A successful claim could subject a dealer to injunctive relief and actual and punitive damages. See 720 ILCS 5/14-6. Therefore, it is important that Illinois dealers and Wisconsin dealers that service Illinois consumers review their data tracking tools to mitigate risk.

How Dealers Can Protect Themselves

Dealers must fully understand what tools are being used on their websites, exactly what data those tools collect, and how that data is stored and protected. Even if a dealer knows such tools exist, they may not fully understand how they operate, what information they gather, and where such information is shared. For example, one specific feature many plaintiffs have identified in the California class actions is Google Analytics, which may share customer data without the dealer fully knowing how it operates.

Dealers must also clearly inform customers what specific tools they are using on their website and give customers the option to consent to their use. Two critically important items to customer consent are the cookie consent banner and a robust privacy policy. First, a cookie consent banner requires a customer to click "accept" before a cookie or tracking pixel can load. Second, a dealer must update its website's privacy policy to include language disclosing the use of any data-collection tools and what information those tools collect. Simply understanding the tools being used and implementing proper cookie consent banners and privacy policies will help dealers adequately minimize their litigation risk.

Takeaway

If you are an auto dealer concerned about the risk of facing class action litigation from the use of consumer tracking technology, it is important that you fully understand the data-collection and consumer tracking tools in use on your website and take the proper steps to minimize your risk by disclosing the use of such tools to your consumers and implementing the proper consents.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.