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RadioShack’s Bankruptcy Comes With The Possibility Of Far-Reaching Implications For Its Customers

Since filing for bankruptcy on February 5, 2015, RadioShack is now in the process of figuring out how to pay off its creditors. The company is auctioning off real estate, trademarks, patents, and other intellectual property, but one of the company’s most valuable assets is the all of the customer data it has collected over the years.

RadioShack was one of the first companies to start collecting customer data. In fact, RadioShack was the first company that consistently asked for customers’ phone numbers. RadioShack’s privacy policy states that it would not sell or rent the personally identifiable information of customers to third parties. However, Hilco Streambank, a company that is working on the bankruptcy process for RadioShack, listed that the company’s “customer databases” were up for sale.

One of RadioShack’s creditors, Standard General, recently won an auction bid for the company’s assets – including its customer data. The agreement still must be approved by a federal bankruptcy court in Delaware, and it is being challenged by the state of Texas, among others. The Texas Attorney General has argued that selling customer data violates a state law that bars companies from selling data which would violate the company’s privacy policies.

Although the Federal Trade Commission cannot comment on potential litigation, it has interjected in similar past bankruptcy sales. In 2000, the FTC successfully prevented from selling customer data when it filed for bankruptcy.

Fearing the precedent for privacy rights that the potential sale could create, more than 20 states have opposed the sale.