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States ask court to keep RadioShack from selling customer data

March 26, 2015

Twenty-two states, including Indiana, have rallied around Texas in its legal challenge to RadioShack’s plan to sell personal data on 117 million customers.

Last month, RadioShack proposed to sell a list of the names, phone numbers, email addresses, and physical addresses of its customers, as well as information on some customers’ shopping habits, as part of an asset sale related to its bankruptcy proceedings.

The company is closing thousands of stores nationwide, including 45 in Indiana.

The plan to sell the data was an explicit violation of the company’s own privacy policy, Texas Attorney General Ken Paxton argued. In a court filing, he cited promises that RadioShack made to customers of its physical stores and its websites that it would never share or sell their data without their permission.

This week, consumer protection agencies from the 22 states and the District of Columbia added letters to the court filing to voice support for Texas’ objection to the sale. It's a reminder that while companies see consumer data as an asset to be exploited, others see it as personal property to be protected.

"There can be no doubt that the information to be sold is exactly the information that Congress intended to be included in its new definition of personally identifiable information," wrote Ellen Rosenblum, Oregon's attorney general. "It defined that information in order to specially protect it."

Other states may join. New York Attorney General Eric Schneiderman, who hasn't signed on to Texas's challenge, distributed a statement Wednesday afternoon saying it was monitoring the situation. "When a company collects private customer data on the condition that it will not be resold, it is the company's responsibility to uphold their end of the bargain," he said.

RadioShack didn't respond to requests for comment.

The bankruptcy court that is hearing RadioShack’s case will decide whether to allow the sale when it meets to decide whether to approve the overall results of the asset auction. The sale of personal data in bankruptcy proceedings isn’t unprecedented, and there have been cases when it has been allowed even when a company has promised not to share personal data. Regulators tend to look more favorably on such sales if the data are sold to another company in the same business as the seller that holds itself to the same privacy policy the customers agreed to.

It’s not clear that is what will happen with RadioShack’s trove of email addreses and phone numbers. On Tuesday, Bloomberg News reported that Standard General, one of RadioShack’s lenders, was poised to win the asset auction. But another bidder, Salus Capital Partners, has complained to the judge that the bidding process hasn’t been fair and says it has outbid Standard General. A hearing on the auction results is scheduled for Thursday.

The states supporting Texas are Arkansas, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Montana, Nebraska, Nevada, Oregon, Rhode Island, South Carolina, Tennessee, Washington and Wisconsin.





 

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