FTC Files Complaint as Toysmart Attempts to Sell Customer Data
The Federal Trade Commission filed a complaint yesterday against failed Internet retailer Toysmart.com LLC and Toysmart.com Inc. The complaint seeking to prevent the sale of personal information collected on the company Web site despite its privacy guarantee “never” to share that information.
The suit, filed in United States District Court for the District of Massachusetts, alleges that Toysmart misrepresented to consumers that personal information would not be shared with third parties by offering that information for sale in at least one venue, an advertisement in the Wall Street Journal. Toysmart is taking bids for its assets by email.
At its Web site, the retailer of children’s toys collected detailed personal information about its visitors, including billing information, and family profiles that include the names and birth dates of children. The size of the once-popular Web site’s data file was not available.
Calls to lawyers for Toysmart were not returned. An attempt to settle the case was reported to be underway yesterday.
Toysmart, based in Waltham, MA, closed its operations and began selling its assets in May. The retailer’s creditors filed an involuntary bankruptcy petition in June and Toysmart filed for Chapter 11 bankruptcy protection later that month.
Walt Disney Co. owns 60% of Toysmart stock and had provided the retailer with $20 million in cash and $25 million in advertising.
As the first wave of dot-coms shutter Web sites and scramble to sell off assets, the case, should legal action be taken, could set the pace against the sale of personal data that contradicts privacy statements.
