Toysmart Database To Be Destroyed

deebaine writes: "CNN has this article describing the settlement of the case of Toysmart.com's customer database, which Toysmart proposed to sell to the highest bidder in order to pay off their creditors. Apparently, the settlement stipulates that a Disney subsidiary will pay Toysmart $50,000, and they will destroy their own records. The FTC is hailing it as a victory."

Comments

A way to assure privacy

[AuMatar]

Theres only one way to assure that a privacy agreement is followed by a corporation. Make it a part of the contract. If its part of the contract you sign (or usually click) when you sign up, they can't legally break it. If they do, not only can the comnpany be sued, but sometimes the employees who knowingly broke the contract.

Of course some sites put in those agreements that they have the right to change it at any time. Simply avoid those sites. I do anyway- any site who isnt willing to agree to one policy probably isn't trustworthy anyway. Find a competitor or a brick and mortar version of the service.

The tears of a marketing droid.

[AtariDatacenter]

I'm sure there are the 'free enterprise/make money fast' types out there that would say this is a complete travesty of justice. Certain parts of a company shouldn't be deemed 'off limits'. In a way, I almost think they're right. Someone *could* buy the customer list, but they should be bound to the conditions that it was compiled under, which means that it can't be used.

The sad thing is that this probably happens all the time, just this was a high enough profile case to be caught.

Re:The tears of a marketing droid.

[Sodium Attack]

Certain parts of a company shouldn't be deemed 'off limits'.

There's even a precedent for this--a company's pension fund. By law, when one company is bought out by another, the purchasing company cannot plunder the other's pension fund--it must be maintained as a pension fund.

An option.

[Restil]

The way I read that article, a company may be 100% willing to uphold their promises to maintain the privacy of their customers, but bankrupcy laws force them to sell off all assets, including their list of customers.

Ok.. fine. They can sell off their list of customers. However, what if their list of customers only includes those customers that have purchased something in the last 30 days.

If I'm a brick&morter operation, sure.. MAYBE I want to send my customers advertisements every once in a while. After all, happy customers will come back for more. For this very reason, there is no need to keep their information on file. THEY WILL RETURN BY THEMSELVES.

If they don't return, well, they probably aren't all that interested anyways, and there's no reason to keep their records on file. All you need is the record of the transaction.

If the computer system automatically deletes the records of any customer who has not purchased something in the last 30 days, then the only customers who will have an open account are the ones that purchase something regularly. When the company plans to go out of business, simply disable the order screen but keep the system online for an extra month. Those customers will automatically be deleted by default, but at no time has the company intentionally destroyed any assets, as the customer list was never considered an asset to begin with.

On the other hand, most likely the companies in question actually WANT to sell it off because thats less money they'll have to come up with later to cover the debts after bankrupcy if any.

-Restil

Seems like a simple contract to me.

[AtariDatacenter]

Imagine that Company X acquires information from Company Y with a contract that says it will only be used to certain purposes. Now Company X goes out of business. Company Z buys the information from Company X in bankruptcy.

IAMAL, but it would seem that Company Z wouldn't then have the right to use the information for whatever purposes they want. The same would seem to go for a contract/agreement where the customer provides information to Company X. Company Z may have bought it, but there should be nothing that they can do with it, because it is outside the terms of the agreement.

At least, that seems like natural law. It would appear to hold some water, though.

FAR from a victory...

[somethingwicked]

Many e-commerce companies lacking the large inventories and capital of brick-and-mortar firms are finding their customer databases to be one of their few assets and may be required to sell off those databases to pay debts under bankruptcy laws.

The actions of the lawyers are to be expected: "What can we sell, what can we sell??"

The truly disgusting issue is that the courts would allow a company to do this. Toysmart clearly announced that this information would not be divulged, and blatantly turned around and tried to sell it.

This was not a victory, it was a close call that was saved by the fact that Disney was more worried about its rep than the money this would generate.

Won't be surprised when the next company in this situation has no rep to lose and sells its promises.

Those names aren't an asset

[Shotgun]

"You're sworn to sell whatever assets you have and give it to the creditors. You're caught between a rock and a hard place," Leahy said.

But that information is not an asset, because the company doesn't have complete control over it. If I put my name in that pot, it would have been under an agreement between Toysmart and myselft that stipulates that my name would not be sold. That contract does not change under bankruptcy proceedings does it? They don't own my information, they've only been given leave to hold it for a while. If a bank goes under, can it take all the deposits and hand it out to creditors? If one of those companies that provide small storage spaces goes out of business, are they suddenly allowed to open all the shed and start auctioning off what they find?

You can't call something you don't own an asset, and I think the bankruptcy court erred when it assumed that Toysmarts marketing list was under the companies control.