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FTC wants bankruptcy court to approve RadioShack’s customer data sale under certain conditions

In a move that’s very welcome, the Federal Trade Commission (FTC) is asking the bankruptcy court to protect customer information that’s currently in RadioShack’s possession.

In the announcement post, FTC consumer protection director Jessica Rich isn’t saying that customer information — which includes names, physical addresses, and email addresses of tens of millions of people — can’t be sold. Rich is making the point that it should be done in a way that doesn’t violate customers’ privacy.

The agency suggests that selling the information in a bundle, along with other assets, instead of selling the data by itself would limit concerns over customers’ privacy, especially if that data was sold to another entity that is in a similar line of business as RadioShack.

In addition, the FTC proposed many other recommended conditions to ensure that data is sold responsibly. One such suggestion includes requiring the buyer to only use the data as per the RadioShack privacy policies that were in place when customer information was first collected. Another recommends that the buyer inform customers about the sale of their personal data and offer them the option to say yes or no to new uses of their data by the new company.

RadioShack’s original plan was to sell off customer information as part of the bankruptcy process, an auction that was seemingly won by Standard General and its $26.2 million bid. However, Apple and AT&T got involved in the process, arguing that, since RadioShack was a re-seller of their products, it could not sell customer information gathered from those buying Apple and AT&T products. In addition, several attorneys general have already spoken out against the sale, arguing it’s a misleading and deceptive practice.

A hearing for RadioShack’s sale of customer information will be held on May 20 by U.S. Bankruptcy Judge Brendan L. Shannon, who already said the court will halt the sal,e if he finds its legality is in question. We will update you on the results of the hearing when it happens this Wednesday.

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