The head of the Federal Trade Commission’s (“FTC”) Consumer Protection Bureau, David Vladeck, recently questioned the planned sale of email addresses and other information for about 48 million consumers by Borders Group, Inc. (“Borders”) as part of that entity’s bankruptcy proceeding.3 In a public letter, Mr. Vladeck noted that the data held by Borders included records of merchandise purchased (video and books) that could be perceived as personal by many customers. The bankruptcy court ultimately allowed the data sale to proceed, while imposing privacy restrictions that are less extensive than those preferred by the FTC.
Barnes & Noble arranged to purchase Borders’ customer data along with other intellectual property assets through the bankruptcy proceeding, thereby satisfying the first two principles set out by Mr. Vladeck. However, the bankruptcy court declined to require customers’ express consent either to the transfer or to any material differences between the two companies’ privacy policies. Instead, the companies must provide notification of the planned sale to Borders customers via email, notices on the two companies’ homepages, and a newspaper ad. Customers will have 15 days from the notice to opt out of having their data transferred to Barnes & Noble.