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:
- Map your vendor relationships. Identify every vendor that collects, stores, or processes biometric identifiers on your behalf.
- Assess the legal landscape. Determine whether any statutory exemption actually applies to your industry and use case. Do not assume your vendor’s compliance program covers you.
- Require BIPA compliance contractually. Your vendor agreements should include clear representations regarding notice, consent, retention, and destruction of biometric data.
- Implement consent workflows. Ensure that informed, written consent is obtained before any biometric data is collected—whether for employees, customers, or other individuals.
The Seventh Circuit gave the broker-dealer’s vendor a pass. Organizations that lack the same regulatory footing should not expect the same result.