A recent Seventh Circuit decision offers a reminder to exercise caution when applying the financial services safe harbor under the Illinois Biometric Information Privacy Act (BIPA). In Cisneros v. Nuance Communications, Inc., No. 24-02982 (7th Cir. Aug. 28, 2026), the court held that the technology vendor’s storing of voiceprint data on behalf of a broker-dealer in securities fell within the financial-institution exemption to the BIPA. But that exemption is narrow—and companies outside the financial services industry, including their vendors, should take notice.

The Case

Norma Cisneros, a broker-dealer customer, alleged that Nuance, a third-party technology vendor, collected and stored her biometric voiceprint in violation of the BIPA. The broker-dealer contracted with Nuance to authenticate telephonic requests from customers, such as Cisneros, to permit financial transactions. Nuance used voiceprint technology to provide this service. Cisneros alleges Nuance violated the BIPA by failing to obtain her written consent and failing to publish retention and deletion schedules for the voiceprint data (claimed to be biometric information under the BIPA). The district court dismissed the case, and the Seventh Circuit affirmed.

The Court held that reading the BIPA in conjunction with Federal Reserve regulations made clear that Nuance qualified for the financial-institution exemption “to the extent that it authenticates the identity of [broker-dealer’s] customers in financial transactions.” The Court noted it was following the reasoning of a Delaware case affirmed by the Third Circuit, and ruling for Cisneros “would need to create a conflict among the circuits on a question of Illinois law…not an attractive prospect,” as the Court put it.

The financial institution exemption under the BIPA is not a blanket pass for any vendor performing identity verification. It applies specifically because the biometric data was collected and used to authenticate identity in the context of financial transactions regulated under federal banking law. Strip that context away, and the analysis changes dramatically.

What If the Vendor Isn’t Working for a Financial Institution?

Consider a company that uses the very same voiceprint or facial-recognition technology to verify identity, but the company is not a financial institution. In that scenario, the BIPA financial-institution exemption would almost certainly not apply. The vendor likely would be subject to BIPA’s full notice-and-consent requirements, including the obligation to obtain informed written consent before collecting biometric data.

Employment Examples:

  • Recruiting services. With recruitment fraud on the rise, organizations are strengthening authentication procedures to help ensure an applicant is who they say they are. Leveraging voiceprint technology or similar biometric technology in the course of that process potentially raises compliance concerns under the BIPA.
  • Call center onboarding. A staffing agency uses a vendor’s voiceprint technology to verify the identity of new remote IT hires during remote onboarding. Because the staffing agency is not a financial institution, neither it nor its vendor can claim the BIPA exemption.
  • Benefit plan administration. Employers want to be sure that only eligible employees receive benefits provided under retirement, welfare, and other benefit programs provided by the employer. Increasingly, employers (more likely their vendors) are leveraging ID verification for this purpose. Not all plans are the same – vendors administering retirement plans for the employer may be more likely to fit under the financial services exemption than vendors administering health, welfare, and fringe benefit plans.

Commercial Examples:

  • Telehealth patient verification. A healthcare platform contracts with a vendor to use biometrics to verify patient identity before appointments. Healthcare entities likely would not be covered by the financial institution exemption under the BIPA for this use case. The platform and its vendor likely need to independently comply with the BIPA’s consent and retention requirements.
  • Retail loyalty programs. A national retailer uses a vendor’s facial-recognition technology at kiosks to verify customer identity for a rewards program. Again, it is unlikely that the financial institution exemption applies. Both the retailer and the vendor face increased risk under BIPA.

Know What Your Vendors Are Doing and How They Are Doing It

In some cases, organizations that obtain ID verification services may not be aware of how their vendor is performing the service. The Cisneros decision underscores a critical point for companies in every industry: you must assess what your vendors are actually doing to verify; are they using biometric data. Authenticating by itself does not trigger the BIPA.

For organizations outside financial services using third party ID verification services, including when functioning as an employer, the practical steps remain the same:

  1. Map your vendor relationships. Identify every vendor that collects, stores, or processes biometric identifiers on your behalf.
  2. Require BIPA compliance contractually. Your vendor agreements should include clear representations regarding notice, consent, retention, and destruction of biometric data.

The Seventh Circuit gave the broker-dealer’s vendor a pass. Organizations that lack the same regulatory footing should not expect the same result.

Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.

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