Wells Fargo, alongside telemarketing firm Credit Wholesale Co. and payment processor Priority Commerce, has agreed to pay $19.5 million to resolve allegations that they violated the California Invasion of Privacy Act (CIPA) by secretly recording small businesses’ telephone calls without consent.
The settlement, detailed in a motion filed in the U.S. District Court for the Northern District of California, is the second largest CIPA settlement to date. If approved by the court, nearly 19,000 claimants will receive an average payment of approximately $680 each.
In addition to monetary compensation, the settlement includes a provision that prohibits Credit Wholesale from recording appointment-setting calls to phone numbers with California area codes, ensuring stronger privacy protections going forward.
“This settlement represents an extraordinary outcome for the class members, especially given that most CIPA class actions settle for amounts ranging between $1 and $60 per claimant,” plaintiffs stated in their motion for final approval. “Beyond the financial recovery, the agreement provides critical prospective relief to prevent tens of thousands of future privacy violations.”
The lawsuit originated in San Francisco County Superior Court before being removed to federal court. It was brought by two California small businesses and centers on calls made by Credit Wholesale while acting as a registered agent for Wells Fargo. The suit alleges that these calls, including telemarketing cold calls on behalf of Wells Fargo and Priority Commerce, were recorded without proper disclosure.
U.S. Magistrate Judge Lisa J. Cisneros granted preliminary approval of the settlement in January and certified a settlement class covering all affected calls. Approximately 102,416 class members received an estimated 149,010 calls, with only one opting out of the settlement. Notably, there were no objections filed to the settlement or associated attorneys’ fees, and nearly 19,000 claims have been submitted.
Plaintiffs emphasized the challenges involved in the litigation, noting that the defendants vigorously contested the claims. Wells Fargo and Priority Commerce denied any principal-agent relationship with Credit Wholesale and argued that any unauthorized recordings were outside the scope of Credit Wholesale’s authority.
“This settlement provides meaningful relief despite the legal uncertainties faced by all parties,” plaintiffs said. “Without this agreement, the small telemarketing firm would likely have been the sole defendant responsible for any judgment, making recovery for class members uncertain.”
The plaintiffs are represented by Jennie Lee Anderson of Andrus Anderson LLP, and Myron M. Cherry, Jacie C. Zolna, and Benjamin R. Swetland of Myron M. Cherry & Associates LLC. Wells Fargo is represented by Matthew S. Knoop and John W. Peterson of Polsinelli PC. Priority Commerce and Credit Wholesale are represented by counsel from King & Spalding LLP and Milberg Coleman Bryson Phillips Grossman PLLC, respectively.
