This month, Trusted Media Brands, Inc. (“TMBI”) – the publisher of Reader’s Digest, Every Day with Rachael Ray and other popular magazines – settled a federal class action lawsuit in Manhattan for over $8 million, reinforcing the importance of consulting with an experienced privacy lawyer when collecting and/or selling customers’ personally identifiable information (“PII”).

How can businesses working with data brokers protect themselves from similar legal risk?

PPPA Class Action Lawsuit

In March 2016, a class action plaintiff sued TMBI in the U.S. District Court for the Southern District of New York (Case No. 16-cv-1812). The named plaintiff alleged in the complaint that TMBI collected customer PII (including information regarding customers’ magazine choices) and sold such information to third-party data brokers, in purported violation of Michigan’s Preservation of Personal Privacy Act (“PPPA”).

Class Action Settlement

Following mediation, the parties’ respective privacy lawyers announced their settlement of the Manhattan federal lawsuit on June 8, 2017.

The agreement requires TMBI to remit payment of $8,225,000 into a settlement fund (up to $2.7 million of which is recoverable by plaintiffs’ counsel as reimbursement for attorneys’ fees). Notably, the parties’ settlement agreement does not require TMBI to curtail the future collection or sale of its customers’ PII or otherwise impose restrictions pursuant to the PPPA.

Why Consulting a Privacy Lawyer Is Good Policy

We have previously reported on the efforts of the Federal Trade Commission (“FTC”) and state attorneys general to police the collection and sale of PII. Professional class action privacy lawyers have taken the FTC’s and AGs’ lead and commenced numerous class actions targeting sellers who work with data brokers. Due to the sensitive nature of PII, businesses that engage in the collection and sale of such information should consult with a competent privacy lawyer concerning applicable state and federal laws, rules and regulations before selling customer information to a data broker.