March 26th, 2015
FTC AND CONSUMER PRIVACY
By: Vasundhara Apte
RadioShack is a leading national retailer of technology products and services as well as products related to personal and home technology and power supply needs. RadioShack filed for Chapter 11 Bankruptcy on February 5th, 2015 after striking a deal to sell up to 2400 of its stores to the wireless service provider Sprint and a hedge fund that is its biggest shareholder.
On 23rd March, 2015 RadioShack commenced the auction of its assets which include its name and intellectual property, trademarks, patents, leases and the names, email addresses and phone numbers of its customers. According to a Bloomberg Report it is estimated that RadioShack is offering more than 13 million email addresses and 65 million physical addresses to the highest bidder.
Standard General, a hedge fund which is one of RadioShack’s creditors emerged the winner of the auction.Salus Capital Partners claims it did not get a fair hearing at the auction on a bid it made which was materially superior. The Attorney General of Texas Ken Paxton filed a challenge arguing that RadioShack made an explicit promise to its customers that it would not sell their personal data. He brought attention to the fact that it was a breach of the company’s statement wherein RadioShack clearly stated that they prided themselves on not selling their private mailing list. Hilco Streambank a subsidiary of RadioShack also remarked that the deals may not be approved by the bankruptcy court and there have already been two legal filings in attempts to block the sale of consumer data.
There have been several oppositions to the sale of customer data by RadioShack. The State Law in Texas prohibits companies from selling personally identifiable information which violates their own privacy policies. At present the states of Oregon, Texas, Pennsylvania and Tennessee are challenging RadioShack’s attempt to sell its customer data which includes personal information like their names, email addresses and phone numbers. AT&T is also trying to stop the sale of customer information as AT&T believes that RadioShack does not have the ownership of the data which it contends rightfully belongs to AT&T. AT&T claims that AT&T helped RadioShack to market phones and in the process allowed RadioShack to amass information which included among other things a list of AT&T customers. AT&T is concerned as one of the bidders plans to co-brand some of the RadioShack stores as Sprint stores and thus AT&T is concerned that this could lead to giving information to its competitor.
Approval of the deal is expected to come on Thursday (26TH March, 2015 when the bankruptcy court is scheduled to rule on the case.