The outdoor apparel retailer Patagonia is being sued for allegedly breaking California privacy law due to its partnership with an artificial and data intelligence company, which plaintiffs say led to their communications being intercepted, recorded and analyzed by a third party without their permission.

The lawsuit filed Thursday alleges that Patagonia vendor Talkdesk routes all customer and business partner communications to its own servers in real time, and upon transcribing them “uses its artificial intelligence models to analyze callers’ words to determine what the caller is talking about and how the caller is feeling.”

Talkdesk also profits off of the communications it intercepts and records from Patagonia customers, according to the lawsuit, which alleges the company trains its AI models on “at least a subset of customer-engagement data and real-time data that flows through Talkdesk’s products.” 

The company also uses some of the data it obtains from Patagonia clients to enhance its services and inform its creation of new products, the lawsuit alleges.

“This information—which includes personal and financial information, as well as verbal and acoustic information—is a form of currency,” they write. “The value is well understood in the e-commerce industry.”

Neither Talkdesk nor Patagonia tell customers their conversations are being intercepted, recorded, analyzed and used by Talkdesk and the practice is not disclosed in Patagonia’s privacy policy, the lawsuit alleges.

Patagonia and Talkdesk did not respond to requests for comment. 

The lawsuit is not without precedent. In May, plaintiffs filed a similar class action lawsuit against Navy Federal Credit Union for allegedly using AI provided by the software company Verint to intercept, record and assess customer calls without providing proper notice to clients nor obtaining their consent.

Talkdesk describes itself on its website as a tool to “help enterprises improve customer service, increase efficiency, and grow revenue with an AI-powered cloud contact center platform that provides applications for omnichannel engagement, customer experience analytics, self-service, workforce engagement, and employee collaboration.”

It offers numerous AI-powered features, including one it calls “Experience Analytics,” which analyzes customers’ speech and text patterns to “determine customers’ intent and sentiment, helping companies to automate tasks and mine customer data,” according to the lawsuit.

A second feature, known as “Quality Management,” allows Talkdesk software to use real time call and screen recording to assess a customer’s “emotional state throughout each interaction with algorithmic analysis of tone and phrasing,” according to the lawsuit.

Finally, the company’s “Copilot” product harnesses a “generative AI-powered assistant that listens, guides, and assists contact-center agents during customer interactions,” the lawsuit said.

The lawsuit does not make clear exactly which Talkdesk features Patagonia deploys.

It goes on to quote a Harvard Law Review article which states that “the monetary value of personal data is large and still growing, and corporate America is moving quickly to profit from the trend.”