Privacy promises and bankruptcy: The latest letter

In the immortal words of renowned legal scholar Yogi Berra, it’s “déjà vu all over again.” A national company is in bankruptcy court and an issue has arisen regarding the possible sale of consumers’ personal information, at least some of which was collected with the express promise, “We will not sell or rent your personally identifiable information to anyone at any time.” This time the company is RadioShack and Bureau of Consumer Protection Director Jessica Rich just sent a letter to the Court-appointed privacy ombudsman recommending conditions the Court could require if a sale of that information goes through. This isn’t new ground for the Federal Trade Commission.

As far back as the Toysmart proceeding in 2000, the FTC has urged bankruptcy courts to consider the consumer privacy issues presented by the sale or disclosure of personal information. The letter to the privacy ombudsman in the RadioShack matter notes the piles of personal data the company has collected over the years: names, addresses, e-mail addresses, phone numbers, purchase histories, etc. It also recaps the privacy promises RadioShack made to customers online and in its stores. If the information is sold, the letter suggests three primary conditions:

1. The buyer should be in substantially the same line of business as RadioShack.
2. The buyer should agree to be bound by the RadioShack privacy policies that were in place when the data was collected.
3. The buyer should get consumers’ affirmative consent before using the data in a way materially different from RadioShack’s promises.