The old adage is no good deed goes unpunished. This cliché is proving true with website and app privacy policies when online operators promise not to sell or rent the personal information of their users. As RadioShack is learning, such language can scupper the sale of a business.
“Never Sell – Never Rent”
The promise to never sell or rent the personal information of users may seem a noble gesture on its face. The problem is most online operators include this statement in privacy policies because they are only contemplating email marketing tactics. However, privacy policies apply to the overall operation of a business, not just email tactics.
“We will not sell or rent your personally identifiable information to anyone at any time.”
“When a company collects private customer data on the condition that it will not be resold, it is the company’s responsibility to uphold their end of the bargain,” said Attorney General Schneiderman. “My office will continue to monitor Radio Shack’s bankruptcy sale and whether it includes auctioning off private customer data. We are committed to taking appropriate action to protect New York consumers.”
Precedent – True.com
“True does not sell, trade, or otherwise disclose customer list names, addresses, birth dates, email addresses or other individually identifiable information to unaffiliated third parties without your permission.”
The bankruptcy court upheld the objection and invalidated the purchase by Plenty of Fish. The ruling instantaneously reduced the value of True.com by $700,000. Ultimately, the domain was sold for $350,000 to TrueCar.com in 2014 – roughly a third what it would have cost with the personal information of users.
Your Online Properties
The terms, privacy policies and disclaimers on your online platforms should act to protect you. Unfortunately, many online operators either use god-awful legal document generators, copy their terms from other sites or try to write their own documents. Doing so invites disaster as RadioShack is learning.
Richard A. Chapo, Esq.