A hearing yesterday did not bring resolution to the fate of Toysmart.com’s customer database. As a result of an objection to the sale by a coalition of states and territories, judge Carol J. Kenner will set another date to hear arguments.
For Massachusetts assistant attorney general Pamela Kogut, who is leading the 39-state-and-territory effort to prevent Toysmart from vending its list of customers as part of its liquidation process, yesterday’s brief hearing in the United States Bankruptcy Court, Massachusetts Division regarding the file raised more questions than it answered.
Kogut was uncertain whether judge Kenner would be accepting bids on the list, or if the list would be temporarily off the market until concerns regarding a Federal Trade Commission ruling on the list, which was rendered Friday, were resolved.
Last Friday the FTC ruled that Toysmart would only be allowed to sell its list as part of a sale of its Web site, and then only to a marketer in a related field who agreed to abide by Toysmart’s original privacy policy.
“Any proposed sale would be inconsistent with our customer protection act,” Kogut told DIRECT Newsline.
“We think that consumers should be given specific notice before their name and information is sold to a bidder, and that they should be given the opportunity to provide their affirmative consent before their information is sold to a third party,” Kogut continued.
According to Kogut, judge Kenner invited the FTC to present its arguments, and additionally said that the states’ objection to the sale “mushed up” the issue by raising the question as to whether states had the right to object to the sale.
The FTC agreement allows for Toysmart to take up to a year to find a suitable buyer for the list. According to Kogut it does not stipulate what would happen to the list if Toysmart ceases entirely to be an entity.
But should the courts take up to a year to decide the list’s fate, the point might be rendered moot: Bidders would be buying a database of outdated names and addresses, the value of which decreases with every passing day.
As it stands now, the Walt Disney company has allegedly offered $50,000 to purchase the list, which it would then destroy. According to Kogut, a market research firm showed up in court and offered $15,000 for it as well.
In ruminations, according to Kogut, judge Kenner considered the possibility of some sort of notice to all consumers of the file. Although Kenner did not make a definitive statement, this course of action might include either an opt-in or opt out possibility.
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