Radio Shack Cannot Sell Customer Info

After Radio Shack filed for bankruptcy, it was announced that Radio Shack was going to sell their customer information – over 100 million customers.

Quickly, several camps came to the bankruptcy court to argue against the sale.

First in line was AT&T (see article) and other carriers.  AT&T claimed that, based on their agreement with Radio Shack, the data belonged to them.

Next came the privacy advocates.  Radio Shack’s privacy policy said they would never sell or rent their customer list and this sure looked like that.

After that came the Attorney’s General of 38 states who argued this was a deceptive trade practice because it went against their written privacy policy.

Finally, the director of the privacy section of the Federal Trade Commission sent the court a letter arguing against allowing the sale.

Given all this, you would think it would be a slam dunk that the court would not allow it, but bankruptcy courts have a mind of their own.

What is also unclear is what conversations may have occurred off the record.  For example, the FTC may have told the court that they couldn’t stop the sale, but that they could issue an order to the buyer regarding the use of the records. One would have to assume that the buyer would want to use them in a sales capacity.

Well, the answer is out.

Texas AG Ken Paxton announced today that  the overwhelming bulk of the data will be destroyed;  no credit card or social security data will be transferred and out of the 8.5 million email addresses in the database, the buyer of the Radio Shack brand will only get to keep the email addresses – no phone numbers – of people who requested product information in the last two years.

The buyer will also have to agree to abide by Radio Shack’s former privacy policy.

All in all, this turned out pretty well for the privacy advocacy side.

This precedent adds weight to the legal theory that courts will really hold you to your privacy policy, even in the case of bankruptcy.

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