# Class action alleged Schwab's Voice ID examined callers' voiceprints without written consent Source: https://www.bankingnewsai.com/ai-incidents/schwab-2022-voice-id-biometric-privacy-suit Last updated: Oct 21, 2026 The Charles Schwab Corporation · Governance finding · severity 1 of 5 A Schwab account holder filed a putative class action against The Charles Schwab Corporation in the Southern District of California on 3 October 2022, alleging that Schwab's Voice ID system used, examined and recorded callers' voiceprints without express written consent, in violation of California Penal Code section 637.3. The complaint alleged that the system combined "audio, voice, and artificial intelligence technologies" and was applied to every caller, not only those who enrolled, and sought $1,000 per violation for a California class. Schwab moved to dismiss in December 2022; the plaintiff voluntarily dismissed the case on 23 February 2023, before any ruling, and no terms were made public. Schwab still offers Voice ID and says it stores an encrypted digital representation of enrolled customers' voices. ## Key facts | | | | --- | --- | | Date | Oct 3, 2022 | | Institution | The Charles Schwab Corporation | | Country | United States | | AI system | Schwab Voice ID · Voice-biometric caller authentication that stores a digital representation of the caller's voice made with a proprietary algorithm · vendor: Nuance Communications (per the Seventh Circuit in a separate case) | | AI? | Machine-learning system (inferred from the record) — The sources describe a machine-learning model; nobody on the record labelled it AI. | | Category | Litigation (Governance finding) | | Status | Court filing | | Severity | 1 of 5 — A putative class claim for statutory privacy damages, voluntarily dismissed within five months before any ruling; no finding, customer loss or regulatory action. | ## What happened? The complaint, filed on 3 October 2022 (No. 3:22-cv-01498), alleged that Schwab integrated its Voice ID service into its call centres around 2017 and that the system "verifies hundreds of voice characteristics", creates a biometric voiceprint of each caller and compares later calls against it. It alleged that Schwab applied these voice examinations to anyone who called, not only customers who enrolled, and that verbal enrolment over the phone did not meet the statute's requirement of express written consent. [2][3] The plaintiff relied on California Penal Code section 637.3, which bars using a system that examines or records voiceprints or voice stress patterns "to determine the truth or falsity of statements" without advance written consent. The complaint argued that verifying who a caller claims to be is such a determination, likened the system to a polygraph, and sought statutory damages of $1,000 per violation on behalf of all California residents whose voiceprints Schwab examined or recorded. [2] Schwab moved on 1 December 2022 to dismiss for lack of jurisdiction and failure to state a claim. The plaintiff opposed in January 2023, then filed a notice of voluntary dismissal on 23 February 2023; the court denied Schwab's motion as moot the same day. No order addressed whether Voice ID falls under section 637.3. [1] In a separate Illinois case brought by a Schwab customer under the state's biometric privacy law, the Seventh Circuit stated in August 2026 that Schwab contracted with Nuance Communications to provide its voice-ID service, and held that Schwab, as a federally regulated financial institution, is exempt from that law. That case was not a claim under the California statute at issue here. [4] ## Timeline - Oct 3, 2022 — Putative class action filed against The Charles Schwab Corporation in the Southern District of California. [1][2] - Dec 1, 2022 — Schwab moves to dismiss for lack of jurisdiction and failure to state a claim. [1] - Feb 23, 2023 — Plaintiff files a notice of voluntary dismissal; the court denies Schwab's motion as moot. [1] - Aug 28, 2026 — In a separate Illinois case, the Seventh Circuit notes Schwab's voice-ID vendor is Nuance and holds Schwab exempt from Illinois' biometric law. [4] ## What was the impact? - Customers: A proposed class of California residents who called Schwab; no class was certified and the size of the class was not established. - Other: Allegations only; no damages, settlement terms or findings were made public. [1][2] ## How did The Charles Schwab Corporation respond? No public statement by Schwab about the lawsuit found as of 2026-10-21 (searched news coverage and the CourtListener docket; Schwab's motion to dismiss is not in the public RECAP archive). Schwab's Voice ID page says customers can "use your voice biometrics to easily authenticate yourself" and that "We store an encrypted digital representation of your voice using a proprietary algorithm." [1][3] ## What was the outcome? Voluntarily dismissed on 23 February 2023 before the court ruled on Schwab's motion to dismiss; the docket shows no settlement terms. No regulatory action has been reported, and Schwab continues to offer Voice ID as an opt-in service. [1][3] ## FAQ ### What happened to the Schwab Voice ID lawsuit? The plaintiff voluntarily dismissed it on 23 February 2023, less than five months after filing and before the court ruled on Schwab's motion to dismiss. The docket shows no settlement terms and no finding that Schwab's Voice ID breached California's voiceprint law. ### Is Schwab Voice ID an AI system? Schwab describes it as voice biometrics that stores an encrypted digital representation of a customer's voice made with a proprietary algorithm. The complaint alleged the system combines audio, voice and artificial intelligence technologies; Schwab has not called it AI on the record reviewed here. ### Who provides Schwab's voice ID technology? According to the Seventh Circuit's August 2026 opinion in a separate Illinois case, Schwab contracted with Nuance Communications to provide its voice-ID service. The California complaint described here did not name a vendor. ## Sources 1. [Laughead v. The Charles Schwab Corporation, No. 3:22-cv-01498 (S.D. Cal.), docket](https://www.courtlistener.com/docket/65396985/laughead-v-the-charles-schwab-corporation/) — CourtListener (U.S. District Court, S.D. Cal. docket), Feb 23, 2023 (court): "ORDER BY JUDGE BATTAGLIA: finding as moot 11 Motion to Dismiss for Lack of Jurisdiction; finding as moot 11 Motion to Dismiss for Failure to State a Claim, in light of the voluntary dismissal." 2. [Class Action Complaint, Laughead v. The Charles Schwab Corporation (Dkt. 1)](https://www.courtlistener.com/docket/65396985/1/laughead-v-the-charles-schwab-corporation/) — U.S. District Court, S.D. Cal. (via CourtListener), Oct 3, 2022 (court): "Defendant utilizes a system that enables it to examine the voice of anyone that calls it to determine the truth or falsity of the callers' statements. The software combines audio, voice, and artificial intelligence technologies to compare the callers' voices to a comprehensive database of recordings and metrics." 3. [Schwab Voice ID](https://www.schwab.com/voice-id) — Charles Schwab, Oct 21, 2026 (official): "We store an encrypted digital representation of your voice using a proprietary algorithm. Your Schwab Voice ID only works with our system." 4. [Cisneros v. Nuance Communications, Inc., No. 24-2982 (7th Cir. Aug. 28, 2026)](https://law.justia.com/cases/federal/appellate-courts/ca7/24-2982/24-2982-2026-08-28.html) — U.S. Court of Appeals for the Seventh Circuit (via Justia), Aug 28, 2026 (court): "Charles Schwab, a brokerdealer in securities, allows customers to authenticate telephonic requests using voice-ID technology. ... Schwab contracted with Nuance Communications to provide this voice-ID service." ## Related incidents - [Callers sued over Nuance voice biometrics on Chase customer-service calls](https://www.bankingnewsai.com/ai-incidents/jpmorgan-chase-2022-nuance-voiceprint-suits) All AI incidents at banks: https://www.bankingnewsai.com/ai-incidents --- Canonical page: https://www.bankingnewsai.com/ai-incidents/schwab-2022-voice-id-biometric-privacy-suit Part of [BankingNewsAI](https://www.bankingnewsai.com/) — the register of AI incidents at banks: https://www.bankingnewsai.com/ai-incidents. Markdown versions of every reference page: append `.md` to the page URL; index at https://www.bankingnewsai.com/llms.txt.