Antitrust Law Daily Wrap Up, PRIVACY NEWS: Rich suggests conditions on sale of consumer data in Radio Shack bankruptcy case, (May 18, 2015)

By Michael Menzhuber, J.D., LL.M.

In her letter to the court-appointed consumer privacy ombudsman in the bankruptcy case of Radio Shack, FTC Consumer Protection Director Jessica Rich recommended conditions that the court could place on the sale of consumers’ personal information to protect their privacy. Rich also asked that the ombudsman include the letter in her report to the bankruptcy court, according to an FTC announcement.

Rich stated in her letter that substantial amounts of personal data collected by RadioShack—including tens of millions of consumers’ names, addresses, e-mail addresses, and purchase histories—are among the assets being put up for auction to settle the bankruptcy. She pointed out that Radio Shack had made extensive privacy promises to its consumers, both online and in its stores, which included promises not to sell consumers’ information or the company’s mailing lists.

The official noted that the FTC had intervened in a similar bankruptcy case involving Toysmart, an online realtor who sought to sell customer’s personal information after making privacy promises to its customer. In the that case, a number of conditions were placed on the sale of the data that allowed Toysmart to divest the assets while protecting consumers’ information from being used in ways that they did not anticipate. In her letter, Rich recommends similar conditions be applied to the sale of RadioShack customer information. These conditions include:

• Bundling consumers’ information with other assets rather than selling it as a standalone asset;

• Limiting the sale of consumer information to entities that are in substantially the same line of business as RadioShack;

• Requiring that buyers agree to be bound by the RadioShack privacy policies that were in place when the consumers’ data was collected; and

• Requiring that buyers provide consumers with notice and obtain their affirmative consent before using data in a way that is materially different from the promises that RadioShack made to consumers.

News: ConsumerProtection Privacy FederalTradeCommissionNews