California-headquartered Patagonia is facing two proposed class action lawsuits, both rooted in allegations of consumer privacy violations.

Consumer Michelle Gills sued Patagonia in Superior Court in California on July 11, alleging that the outdoor clothing brand, whose products sell at retail and in the promotional products industry, used artificial intelligence-driven customer service software from provider Talkdesk to tap, record and analyze customer phone calls without telling the callers that such tracking, recording and sharing was happening.

In the other case, Arizona resident Heather Knight sued Patagonia in federal court in the Grand Canyon State. Knight alleges that Patagonia violated Arizona’s Telephone, Utility and Communication Service Records Act by embedding spy trackers in emails and then using the technology to capture and log sensitive information about the company’s email subscribers – all without their consent.

Both suits are seeking class action status. Patagonia hadn’t responded to a request for comment as of this writing.

Depending on how the cases play out, there could be wider implications for marketers and customer service operations across industries, with precedent potentially being established that influences what companies must do to keep within privacy laws amid growing intrusion concerns in the digital age.

Allegations of AI-Fueled Call Tracking & Analysis

The complaint in the California case says that Gills is a Patagonia customer who called the clothing company’s customer service line in 2024. She expected the call to be confidential. It wasn’t, the complaint states.

“She did not know that Talkdesk was secretly listening to her conversations, nor did she consent to her conversations being intercepted, listened to, recorded and used by Talkdesk,” the complaint says. “She would not have communicated with Patagonia if she had known this were the case.”

The software from Talkdesk, the complaint elaborates, enables its clients, like Patagonia, to capture and review calls between the companies and their customers and business partners.

“When individuals call Patagonia, Talkdesk intercepts the call, listens to it, records it and analyzes the content,” the complaint says. “Talkdesk’s products do this for every call ... It routes every communication directly to Talkdesk’s servers in real time and transcribes these conversations as they occur.”

Talkdesk uses its artificial intelligence models to analyze callers’ words to determine what the caller is talking about and how the caller is feeling, according to the complaint. A feature from the software, Copilot, acts as a generative AI-powered assistant that listens to, guides and assists contact-center agents during customer interactions, the complaint says. Talkdesk also uses the recorded communications for its own purposes, including improving its products, the suit asserts.

While Patagonia tells customers that calls may be recorded for “quality training purposes,” the suit says it does not disclose in its online privacy notice that the customer’s discussion and potentially sensitive information – like their credit card numbers and addresses that might be divulged in an interaction – are being shared with Talkdesk, a San Francisco-headquartered company.

As such, the suit asserts that Patagonia has violated the California Invasion of Privacy Act and committed invasion of privacy under California’s constitution. Gills is seeking damages of $5,000 per violation per class member, as well as other remedies, including an injunction prohibiting Patagonia’s alleged offending practice.

The Federal Trade Commission (FTC) issued a statement in February that warned it will bring actions against companies, particularly AI firms, that quietly change the terms of their service to allow for more expansive customer data sharing without adequately notifying consumers.

Said the FTC: “It may be unfair or deceptive for a company to adopt more permissive data practices – for example, to start sharing consumers’ data with third parties or using that data for AI training – and to only inform consumers of this change through a surreptitious, retroactive amendment to its terms of service or privacy policy.”

Spy Trackers Alleged

In the Arizona case, Knight says she is a subscriber to Patagonia’s email marketing list.

Still, she says she was never asked for, nor did she give, consent for Patagonia to collect private information from her interactions with the emails, though that’s exactly what the brand allegedly does using what the suit described as “hidden spy pixel trackers within its emails.”

The trackers, the suit says, log information like the time and place subscribers open and read their messages, how long the subscribers read the email, subscribers’ location, subscribers’ email client type, subscribers’ IP address, subscribers’ device information, and whether and to whom the email was forwarded.

$1,000
The amount plaintiff Heather Knight is seeking per alleged violation in her lawsuit centered on accusations that Patagonia used hidden spy trackers in marketing emails and didn’t tell subscribers.

“By failing to receive consent from plaintiff and class members, the defendant is violating Arizona’s Telephone, Utility and Communication Service Records Act, a statute that prohibits procuring or attempting to procure the communication service records of email recipients without their authorization,” attorneys for Knight assert in their filing.

The class Knight seeks to represent is all people in Arizona who opened a marketing email from Patagonia that contained tracking pixels. Among other things, she’s asking for $1,000 per violation in damages and an injunction that would bar Patagonia from its alleged illicit practice of tracking without consent.

The court gave Patagonia until July 23 to formally respond via court filing to Knight’s complaint.

Consumers have brought similar proposed class action cases against big name companies of late, accusing entities like Delta Air Lines, BuzzFeed, General Motors, OnStar and LexisNexis Risk Solutions of unlawful data tracking tied to alleged practices that include wiretapping, sharing personal information and hidden trackers.