FTC Urges Consumer-Protection Safeguards in RadioShack Sale of Customer Data

The U.S. Federal Trade Commission is requesting that the U.S. bankruptcy Court ensure consumer protections are firmly in place as one of several conditions tied to the proposed sale of costumer data by bankrupt retailer RadioShack.
Substantial amounts of personal data collected by RadioShack, including consumers’ names, addresses, e-mail addresses, and purchase histories, are among the assets being put up for auction to settle RadioShack’s bankruptcy. Documents indicate information from tens of millions of consumers may be among the assets for sale.

RadioShack has said that credit card numbers, debit card numbers, and transaction data that are not typically found on a sales receipt will not be sold.
But what is up for sale includes a “contact database,” consisting of about 8.5 million opt-in email addresses, of which about 3.1 million were active within the last 12 months, and a “customer database,” consisting of about 67 million customer names and physical mailing address files, of which approximately 11.9 million made a purchase in the last 12 months.
“Consumers provided personal information to RadioShack with the expectation that RadioShack might use it, for example, to make new offers of interest to consumers, but not to sell or rent it,” Jessica Rich, the head of the FTC’s consumer protection bureau, wrote in a letter to a privacy ombudsman appointed by the bankruptcy court.
Standard General LP won RadioShack’s assets at auction, beating 16 other bidders. Standard General agreed to pay $26.2 million for the chain’s name and intellectual property. The sale of the electronics retailer’s customer data has resulted in objections from 37 state attorneys general. Apple and some wireless carriers have also opposed the sale of some of the customer data. Customer data is stored on the databases of many companies by using apps such as Mailchimp vs Sendgrid, so it’s important to make sure they are stored securely which is why some are opposed to the sale of data.

‘Bound By and Adhere to Privacy Policies’

In a letter Saturday to a court-appointed consumer privacy ombudsman, Rich said that the agency’s concerns “would be greatly diminished” if certain conditions were met, including that the data was not sold standalone, and if the buyer is engaged in substantially the same lines of business as RadioShack, and expressly agrees to be bound by and adhere to privacy policies.
In the letter, Rich cites the “extensive privacy promises that RadioShack made to consumers both online and in its stores – including promises not to sell consumers’ information or the company’s mailing lists.” She mentions the FTC’s previous intervention in the bankruptcy of online retailer Toysmart, which sought to sell its customers’ personal information, counter to the promises the company made in its privacy policies.
In the Toysmart case, a settlement with the company placed a number of conditions on the sale of the data that allowed the company to divest the assets — while protecting consumers’ information from being used in ways they did not anticipate. Rich’s letter recommends similar conditions be applied to the sale of RadioShack customer information.

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