FTC recommends conditions for sale of RadioShack consumer information
The FTC has recommended a list of conditions that a bankruptcy court should impose on the sale of RadioShack's information assets.
As RadioShack divests itself of assets as part of a Chapter 11 bankruptcy case, the Federal Trade Commission (FTC) has asked a court to impose restrictions on what the company does with the information it has on 67 million consumers.
In a letter to the court-appointed consumer privacy ombudsman, FTC Consumer Protection Director Jessica Rich recommended that the information, which includes names, addressed and any associated transactions, not be sold as a standalone asset and only to a buyer that "is engaged in substantially the same line of business as RadioShack." Rich also said the buyer should be bound to the electronics retailer's privacy policies that were in place when the data was gathered.
While she acknowledged the likely value of the information assets, Rich expressed concern that selling or transferring the data "would contravene RadioShack's express promise not to sell or rent such information" and ultimately that "could constitute a deceptive or unfair practice" under the FTC Act.
She also said her agency believes that RadioShack should obtain “affirmative consent from its customers” before selling the data. The conditions are similar to those imposed on Toysmart after the the FTC intervened. In that case, the conditions "allowed the company to divest the assets while protecting consumers' information from being used in ways they did not anticipate," according to an FTC release.
"We believe the Toysmart precedent is an appropriate model to apply here to third parties," Rich noted in the letter. "In this case, 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."