FTC sides with Apple, other parties concerned with privacy of RadioShack customer data

In a letter sent to Elise Frejka, the court-appointed privacy ombudsman in the matter, FTC Consumer Protection Director Jessica Rich pointed out that RadioShack originally collected the data with the promise that it wouldn't sell the data "to anyone at any time," according to Law360. Rich argued that sharing any of 21 categories of data without restrictions would break that guarantee, and represent a "deceptive or unfair practice" under Section 5 of the FTC Act.

Recommendations included that the court not sell the data as a separate asset, that a buyer be in "substantially the same lines of business" as RadioShack, and that the buyer agree to follow the policies RadioShack originally had when the data was collected. Any changes would require explicit consent from consumers.

Alternately, however, Rich said that the FTC would accept RadioShack obtaining consent from customers before transferring data, and deleting listings for anyone who opts out.

The proposed terms are similar to those agreed on by Toysmart.com, a bankrupted online toy store that the FTC sued in 2000 for violating Section 5. Much like RadioShack, Toysmart originally told customers that it wouldn't share data with third parties.

The letter puts the FTC on the side of factions like AT&T and Apple, which have objected to sharing consumer data involving their products. Last week, the RadioShack data was won in an auction bid by hedge fund Standard General, which also picked up other intellectual property and 1,700 stores. The bid is subject to court approval however, and privacy arguments may well force changes.