FTC proposes a compromise so RadioShack can sell consumer data

On Monday the Federal Trade Commission (FTC) sent a letter to the bankruptcy court presiding over RadioShack's supervised asset sell-off suggesting a compromise that would allow RadioShack to sell its database of information from 117 million customers.

The sale of the data—which includes names, addresses, e-mail addresses, phone numbers, and purchase histories—has caused concern among consumer protection advocates. The states of Tennessee and Texas recently filed objections to RadioShack's plan to find a buyer for its database, saying that the company promised in various privacy policies that it would not resell customer data to third parties. AT&T and Apple also objected to the sale of portions of the database, saying that that information actually belongs to them and not to RadioShack as per RadioShack's business agreements with those companies.

According to FTC Consumer Protection Director Jessica Rich (PDF), RadioShack could find a way to appease consumer advocates by taking a look at a bankruptcy case from 2000 involving retailer Toysmart. In that case, Toysmart had wanted to sell off its database of customer data, but after some pushback from the FTC it agreed to certain limitations on the sale of the database. For example, the buyer could not buy the customer database alone—it had to receive it bundled in with the sale of other assets like trademarks or Web content. In addition, the information had to be sold to a business similar to Toysmart and that buyer had to agree to honor the privacy policy that Toysmart had pledged to its customers.