Providing an important reminder about the intersection of privacy promises and bankruptcy, the Texas Attorney General has filed an order to halt the sale of customer information in RadioShack’s bankruptcy.
With the hope of keeping the company alive, RadioShack offered to sell various assets in the course of its bankruptcy case. Included in the list: “customer lists and other customer-related information.” Texas Attorney General Ken Paxton took the deposition of two RadioShack witnesses and learned that the information included customer names, phone numbers, mailing addresses, e-mail addresses, and in some situations the activity data of 117 million customers—or roughly 37 percent of the country’s total population.
Paxton filed an objection with the Delaware bankruptcy court overseeing RadioShack’s proceedings, citing violations of state consumer protection laws. The company’s online policy stated: “We will not sell or rent your personally identifiable information [PII] to anyone at any time,” while in-store signage stated: “At RadioShack, we respect your privacy. We do not sell our mailing list.”
The proposed sale was therefore impermissible as a “false, misleading, and deceptive business practice” in violation of Texas state law, the AG argued.
A few days later the state of Tennessee joined with Texas. Paxton then supplemented his filing to inform the bankruptcy court that an additional 21 governmental entities had expressed their support for the objection, including Arkansas, Colorado, Connecticut, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Maine, Maryland, Massachusetts, Montana, Nebraska, Nevada, Rhode Island, South Carolina, Washington, and Wisconsin.
The bankruptcy court permitted the sale of RadioShack’s assets to move forward, albeit without the customer PII, leaving the issue to be resolved at a later date.
To read the Texas Attorney General’s objection in RadioShack’s bankruptcy case, click here.
To read the AG’s supplemental motion, click here.