A bankrupt RadioShack is attempting to auction sensitive customer data in a last bid for money

Unwilling to waste two days waiting for an Amazon Prime delivery, I headed off to my local, now defunct RadioShack in search of a Y-splitter. But in my eagerness to save time, and face for not having obtained the item sooner, I completely forgot that there no longer is a local RadioShack; it was one of the 2,000 or so nationwide stores swept under the tide of the electronics retailer’s bankruptcy. As part of the impending legal machinations of bankruptcy, all of RadioShack’s assets — leases, trademarks, and patents — will be carved out for auction, including the names, e-mails, and phone numbers of millions of customers.

 According to a recent Bloomberg report, a note appears on the website maintained by Hilco Streambank, the intermediary representing RadioShack, stating that 13 million email addresses and 65 million customer names and home addresses will be sold to the highest bidder. Fortunately, this prospect doesn’t sit too well with the Attorneys General of certain states, who declare that the proposal is a violation of consumer rights.

In response, Texas Attorney General Ken Paxton and Tennessee Attorney General Herbert Slatery III are spearheading a lawsuit to prematurely end the sales proposal, contending that the RadioShack Corporation explicitly promised in writing that it would not sell its customers’ personal data according to a sign used in its retail location: “We pride ourselves on not selling our private mailing list.” To a greater extent, Texas State law legally prohibits companies from selling personally identifiable information in a way that violates the company’s own privacy policy. Paxton explains that a total of 117 million people are included in the data deal.

For less altruistic motives, AT&T has also positioned itself as ab opponent of the data auction. The wireless carrier proclaims that it owns the data and that it’s not RadioShack’s to sell; it argues that the customer database amassed as a result of the partnership between the two companies in which RadioShack was permitted to sell AT&T phones, thus the listing contains AT&T customer information. Since one of the highest bidders in the asset auction seeks to co-brand certain RadioShack locations as Sprint stores, AT&T fears this sensitive data will fall into the hands of its competitors (who will presumably offer existing AT&T customers much better deals in the recourse; woe is me).

It’s worth pointing out that this issue isn’t in any way shocking, as it has continuously cropped over the years with other parties. Back in 2000, a bankrupt online toy store called Toysmart.com also sought to sell its customer data, representing its highest valued asset. Within no time, the Federal Trade Commission cracked down on the proposal, citing a company privacy policy that promised never to share customer information with third parties. 

With regards to AT&T, the final verdict will ultimately depend on the structure of the sales agreement; speaking with Bloomberg, an FTC spokeswoman points to a 2011 letter addressing the bankruptcy of Borders, as the FTC’s general approach to the matter. It was decided that Borders was within its right to auction personal data so long as winning bidder was in the same line of business as the seller, withstanding that the data was not sold as a single asset.

So, what’s the big takeaway? Basically, the devil is in the details. Meaning, companies will undeniably edit their privacy policy with less stringent wording, to tip-toe around these laws gong forward.

Source: Bloomberg