What Happens To Privacy In Bankruptcy?

With the Borders bankruptcy filing earlier this year, the biggest concern on the minds of most people was what it meant for the future of book stores and the book industry generally. And if you read about the case on a Kindle, you probably get what I mean. But the Federal Trade Commission is more concerned that Borders continues to protect consumer privacy throughout the process. David C. Vladeck, the Director of Consumer Protection, recently sent a letter to the Borders bankruptcy action consumer privacy ombudsmen, asking that Borders obtain express consent from former customers before transferring any personal customer data in a bankruptcy sale. The request isn’t unreasonable. Borders had adopted privacy policies before the bankruptcy filing in which it promised to “only disclose your email address or other personal information to third parties if you expressly consent to such disclosure.” If Borders failed to abide by its policy, Vladeck’s letter warned that the FTC could consider it a deceptive practice. The letter does offer some compromise, noting that bankruptcy could present “special circumstances” (ya think?). According to the letter, the FTC’s concerns would be “greatly diminished” if Borders agreed not to sell the customer information as a “standalone asset”; the buyer was engaged in “substantially” the same line of business; the buyer agreed to be bound by Borders’ privacy policy; and the buyer agreed to get “affirmative consent” from customers regarding any material changes to the privacy policy. I have said it before. Data privacy is the biggest legal issue out there these days. No matter the court.