The Seventh Circuit recently clarified the limits of the Illinois Biometric Information Privacy Act’s (BIPA) financial-institution exemption in Cisneros v. Nuance Communications, Inc., No. 24-02982 (Aug. 28, 2026). The case involved a broker-dealer’s use of a third-party vendor to store voiceprint data for customer authentication, raising questions about consent and data-retention obligations.
Ruling Confirms Narrow Scope of the Exemption
The court held that Nuance qualified for the exemption “to the extent that it authenticates the identity of [broker-dealer’s] customers in financial transactions.” The decision relied on a reading of BIPA alongside Federal Reserve regulations, aligning with a Delaware precedent affirmed by the Third Circuit.
The opinion noted that the exemption is not a blanket shield for any entity handling biometric identifiers. Its applicability hinges on the data being collected expressly for authentication within federally regulated financial transactions.
Vendors Outside the Financial Sphere Face Full BIPA Requirements
If a company employs the same voiceprint or facial-recognition tools but does not operate as a financial institution, the exemption is unlikely to apply. Such providers would be subject to BIPA’s notice-and-consent regime, which mandates informed written consent before any biometric data is captured.
Recruiting firms increasingly use voiceprint technology to verify applicant identities amid rising fraud. Because these organizations are not regulated financial entities, they must obtain explicit consent and disclose retention schedules under BIPA.
Staffing agencies that onboard remote IT hires through voiceprint verification also fall outside the exemption. Both the agency and its provider must comply with the act’s consent, disclosure, and data-destruction obligations.
Benefit-plan administrators present a mixed picture. Vendors handling retirement-plan data may align with the financial-institution exemption, whereas those managing health, welfare, or fringe-benefit plans generally do not, requiring full BIPA compliance.
Telehealth platforms that contract with biometric service providers to confirm patient identity before appointments are similarly excluded. Healthcare entities must independently satisfy BIPA’s consent and retention mandates.
Retailers deploying facial-recognition kiosks for loyalty-program enrollment also cannot rely on the exemption. Both the retailer and its technology provider face heightened liability if they fail to meet the statute’s statutory requirements.
Practical Steps for Organizations Using Third-Party ID Verification
Companies should begin by mapping all vendor relationships that involve the collection, storage, or processing of biometric identifiers. This inventory helps identify which contracts may trigger BIPA obligations.
Next, assess whether any statutory exemption truly applies to the specific industry and use case. Assumptions based on a provider’s internal compliance program do not substitute for a legal analysis.
Contracts with biometric service providers must contain explicit representations regarding notice, written consent, data-retention schedules, and secure destruction. Including these clauses creates a contractual baseline for compliance.
Implementing consent workflows is essential. Organizations must ensure that individuals provide informed, written consent before any voiceprint, facial scan, or similar biometric data is captured, regardless of employee or customer status.
Finally, ongoing monitoring of vendor practices can detect deviations from agreed-upon protocols. Regular audits and updated agreements help maintain alignment with BIPA’s evolving jurisprudence.
While the Seventh Circuit granted a pass to a broker-dealer’s vendor, the decision highlights that the exemption hinges on a narrow financial-transaction context. Companies outside that niche should not assume similar protection.
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