Mandatory Recording of Sales Conversations: Implications of Amendment to Israeli Consumer Protection Law for Businesses and Financial Institutions

Dealers and financial institutions will soon be required to record particular sales calls, retain the recordings for specified periods, and provide them to consumers upon request. The new amendment to the Consumer Protection Law does not merely create a documentation requirement. It also introduces an unusual sanction under which any dealer that fails to comply may, in civil proceeding, be treated as having admitted the consumer’s version of events.

Amendment 74 to the Consumer Protection Law recently passed its second and third readings. Its purpose is to address the phenomenon of telephone persuasion, which primarily affects senior citizens. These are cases in which consumers claim that they were promised one thing, while the dealer claims otherwise, and there is no objective evidence to resolve the dispute.

The legislative solution imposes new obligations on dealers and significantly increases the consequences of non-compliance.

New Obligations

Any dealer that enters into a transaction of the type listed in the Ninth Addendum to the Law, where the total price is at least ILS 750 or is unknown at the time of the call, will be subject to four cumulative obligations:

1. Record all telephone conversations relating to the transaction, including calls made through electronic means, regardless of whether the dealer or consumer initiated the call.
2. Inform the consumer at the beginning of the call that the conversation is being recorded and that the consumer is entitled to receive the recording upon request.
3. Retain the recording for at least two years if a transaction is completed, or for at least six months if no transaction is completed.
4. Provide the recording, together with written details of the call dates, to a consumer who requests them, within 10 business days and at no charge, except in the case of repeated requests for the same call, for which payment may be charged.

Most organizations already record calls for service or quality-control purposes. However, the amendment requires them to ensure that their systems also meet these new legal requirements, including the ability to identify relevant calls, retain them for the required periods, and retrieve and deliver recordings or call details to consumers within 10 business days.

Which Transactions Are Covered by the Amendment?

The Ninth Addendum focuses on transactions considered to present a heightened risk of deception. These include sales of goods, other than food, following a marketing call; loan brokerage; fund tracing; reviews of medical rights or eligibility for tax refunds, where the service is not performed by a party licensed under the Accountants’ Law; communications, internet, broadcasting, and content services; credit data improvement; ongoing maintenance and repair services; certain medical services; and gas supply.

These are generally transactions marketed by telephone, often based on trust and, in some cases, on significant sales pressure.

The Sanction: If a Dealer Fails to Comply, the Court Will Presume the Consumer Is Correct

A dealer that fails to provide a recording, or details of call dates, to a consumer upon request will be deemed to have admitted the consumer’s version of the contents of the call, or even that the call took place.

In other words, if a dealer does not comply with its obligation to provide recordings, the court will presume that the consumer’s version is correct. Only in exceptional cases, where the court is satisfied that there was reasonable justification for the non-provision, will it abandon this presumption.

This is one of the more unusual sanctions introduced in consumer protection law in recent years.

Not Only Businesses: Also Banks, Insurers, and Provident Funds

The original government bill addressed only the Consumer Protection Law. However, the Knesset Economics Committee expanded the regime to additional entities that are generally excluded from that law, including banking corporations, insurance companies and insurance agents, financial service providers holding an expanded license, pension consulting, marketing and clearing entities, and provident funds.

For financial entities, the obligations apply to every sales call initiated to a private consumer. Unlike the regime for nonfinancial entities, there is no minimum transaction threshold. The obligation applies to every initiated call, regardless of the transaction amount.

When Will the New Obligations Take Effect?

The amendment will come into force about eight months after publication, on March 22, 2027. However, the Minister of Economy and Industry and the Minister of Finance, with the approval of the Economic Affairs Committee, may postpone the effective date by up to four additional months if they believe preparations have not been completed.

It is important to note that, from the date of publication of the law, dealers are already required to retain existing recordings, even if a consumer asks for them to be deleted. The obligation to provide recordings to consumers upon request will apply only from the effective date.

This amendment marks a significant change for dealers and financial entities engaged in telephone sales. Organizations should begin reviewing their sales-call practices, recording systems, data-retention policies, and retrieval procedures now. We recommend ensuring that internal procedures, information systems, and operations processes are capable of meeting the new statutory requirements, since failure to comply may affect not only regulatory exposure but also the organization’s ability to defend itself in consumer litigation.

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Adv. Efrat Cohen is a senior partner and head of the firm’s Regulation Department.

Adv. Or Levi is an associate in the firm’s Regulation Department.

Barnea Jaffa Lande’s Regulation Department assists dealers, financial entities, and commercial companies in implementing new regulatory requirements and integrating them into their operations. The department’s services include  reviewing whether the amendment applies to the organization, identifying regulatory gaps, revising procedures, sales processes, and recording systems, implementing the new requirements, and reducing exposure to enforcement proceedings and legal risk.