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Bankrupt company that promised to keep customer data private is selling it

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is a small business bankruptcy ?”

 

For years, retail chains have been collecting customer data to use for marketing, advertising and a host of other reasons that have nothing to do with consumers and everything to do with profiting off their information.

Radio Shack Store Charlotte Bankruptcy Lawyer North Carolina Debt AttorneyRadioShack employees have been on the front lines of that company’s customer data collection efforts, collecting customers’ contract information at checkout, according to PC World. The now-bankrupt company has amassed a list of 65-million customer names with accompanying physical addresses, as well as some 13-million email addresses. The company also has millions of phone numbers and information on customer shopping habits.

Signage in RadioShack stores provides that the chain prides itself “on not selling our private mailing list,” according to PC World, but that is exactly what the company is proposing to do in its pending bankruptcy. The customer lists and other information are considered “assets” for bankruptcy purposes. Like other assets, the bankruptcy trustee took possession of the lists and sold them to Standard General, a hedge fund that is RadioShack’s largest shareholder.

Sales of customer lists have precedent in Bankruptcy Courts. In 2011, the Federal Trade Commission sanctioned Borders Group’s sale of personal data of customers on the condition that the purchaser of the data was in the same line of business (book-selling) and honored Borders Group’s privacy policy.

The RadioShack customer-list sale must be approved by the Bankruptcy Court. Texas Attorney General Ken Paxton has challenged the sale, arguing that Texas law prohibits companies from selling “personal information in a way that violates their own privacy rules,” according to Bloomberg. Paxton said the RadioShack data sale may affect as many as 117-million people.

AT & T has also challenged the sale of customer data, arguing that RadioShack is not entitled to personal information of customers that was gathered through the sale of wireless telephone devices in RadioShack stores. RadioShack acted as AT & T’s agent, in effect, in selling the telephone company’s wireless devices in its stores. AT & T is now worried that if RadioShack’s customer data is sold, information on wireless customers will fall into the hands of its competitors. For that reason, AT & T wants to see the customer lists destroyed.

In the Borders sale, the Federal Trade Commission appeared to reverse course on a 2000 action in which it sued to prevent bankrupt online toy company Toysmart.com from selling off its customer database, citing privacy concerns. The Commission’s action was ultimately successful, and the Toysmart.com data base was destroyed. Since the Borders case, companies have attempted to tailor data sales to purchasers who are in the same line of business as the debtor and who promise to honor privacy commitments made to customers.

RadioShack’s promises to honor customers’ privacy are as good as its promises to repay creditors, Forbes notes. That means the promises are “pretty much null and void unless [the Bankruptcy Court or creditors agree] to honor them.”

If you find yourself needing the services of an experienced Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://www.pcworld.com/article/2901028/radioshack-puts-customers-personal-data-up-for-sale-in-bankruptcy-auction.html

http://www.forbes.com/sites/paularosenblum/2015/03/24/bankrupt-radioshacks-attempts-to-sell-customer-data-meets-resistance/

 

 

Image Credit:

http://commons.wikimedia.org/wiki/File:RadioShack_in_Tracy,_California.JPG

 

 

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