Could Privacy Concerns Sink Borders' Bankruptcy Sale?

Barnes & Noble has agreed to pay $14 million for Borders’ intellectual assets which include private customer information.  But the bankruptcy sale could be jeopardized if the court appointed Consumer Privacy Ombudsman’s recommendation that Borders’ privacy policy remain in effect is enforced by the bankruptcy court.

The FTC wrote, in part: “The representations Borders made to its customers about the privacy of their information, including email addresses and purchase history, would likely be considered very important to many customers. In particular, information about the types of books and videos customers have purchased would be considered personal to many customers.  Consumers who bought such items would likely be very concerned if their information were to be transferred without restriction to an unknown purchaser for unknown uses. Potential Sale or Transfer of Personal Information We understand that Borders’ customer information constitutes a potentially valuable estate asset. We are concerned, however, that any sale or transfer of the personal information of Borders’ customers private information would contravene Borders’ express promise not to disclose such information and could constitute a deceptive or unfair practice.

At the heart of the matter is consent.  Barnes & Noble insists that requiring that Borders customers consent to how their private information is used would be impossible. Barnes & Noble has also made it clear that access to customer information is probably the most valuable part of the intellectual property purchase.  Borders kept extensive information on the buying habits of its customers, getting access to that private information through the bankruptcy purchase could be a huge windfall for Barnes & Noble; but only if privacy concerns are shelved.

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