RadioShack Bankruptcy Pushes Data Privacy Law Limits

May 25, 2015

RadioshackAs the retailer RadioShack works its way through the bankruptcy process, it is selling all of its commercial assets, including a substantial collection of customer data.  Federal and state authorities, as well as other commercial companies, have expressed concern as to the privacy implications of RadioShack’s planned sale of its customer data.  The arrangements now being negotiated for the data sale are likely to help clarify the terms and conditions to be required in the future when businesses transfer their customer data assets.

In bankruptcy, RadioShack has already agreed to sell the vast majority of its stores.  It is now in the process of auctioning off its other commercial assets.  One set of RadioShack assets that is drawing significant attention is its collection of customer data.

The customer data RadioShack plans to sell is limited.  It reportedly includes customer names, mailing addresses, and e-mail addresses.  The company indicates that it does not intend to sell financial data associated with its customers, such as credit card numbers.

Several parties have apparently expressed interest in purchasing the RadioShack customer data.  RadioShack reportedly plans to auction off the data.  It is believed that the most likely buyer of the data assets is General Wireless.

The Federal Trade Commission (FTC) indicated that it will require safeguards to protect data privacy before issuing its approval for the data sale.  The FTC noted that it will require RadioShack and the buyer to apply the data privacy safeguards it imposed on Toysmart in 2000 when that company transferred customer data as part of a bankruptcy process.

Several state attorneys general have also expressed concern about the data transfer.  RadioShack is now apparently negotiating privacy safeguards with those state authorities.  Those negotiations are reportedly progressing, and the parties involved anticipate that they will reach a settlement in the near future.

Various companies that had conducted business with RadioShack are also troubled by the proposed data sale.  For example, some wireless communications service providers and Apple objected to the data transfer.  Those parties expressed concern that RadioShack’s transfer of data associated with their customers could violate the existing privacy policies those companies maintain for their customer data.  Apparently, RadioShack is negotiating with those companies in an effort to develop appropriate safeguards.

Customer information is now a major asset for many enterprises.  For businesses on the verge of bankruptcy, data assets may be their most valuable asset, or even their only commercially viable asset.  Accordingly, there is now intense economic pressure on businesses of all sorts to extract maximum commercial value from their customer data.

The current negotiations associated with RadioShack’s efforts to sell its customer data offer important lessons regarding commercial data privacy.  In today’s business environment, data privacy and information management issues play a critical role in a wide range of strategic and operational decisions and actions.  All enterprises, no matter what their size, must be mindful of the data security and privacy implications of all of their business activities.