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Most Websites Can Sell Your Data During Bankruptcy Fire Sales

by Fox Van Allen on June 30, 2015

Woman shocked at computerThere’s was troubling report on The New York Times website this weekend regarding how some of the most popular websites in the world handle your private data. According to recent analysis performed by The Times and web analytics firm Alexa, the vast majority of websites can transfer customer data to a new company in the event of their bankruptcy or acquisition. This includes 85 of the top 99 most trafficked English websites, including Google, Apple, Facebook, Amazon and LinkedIn.

Of the sites analyzed, only 17 clearly state that they will alert users if their personal data was to change hands. Otherwise, there’s very little that can be done to limit the transfer of data. Both Etsy and allow you to opt-out of such a transfer, but their policy is the exception, not the rule.

The question about what to do with collected customer data is hardly a new one for companies or the U.S. court system. In 2000, the Federal Trade Commission sued for deceptive practices when it attempted to sell customer data after its privacy policy promised not to. More recently, Texas Attorney General Ken Paxton successfully moved to block RadioShack from selling its customer database as part of its bankruptcy fire sale. Like Toysmart, RadioShack had publicly promised not to sell customer data. Much of RadioShack’s data (which includes credit card numbers, dates of birth, social security numbers and more) will be physically destroyed, in part, as a result of Paxton's effort.

“It’s ‘we are never going to sell your data, except if we need to or sell the company,’” says Hal Morris, assistant attorney general of Texas. “This is the type of information that people were entitled to not have trafficked and sold to the highest bidder. I think it’s an important safety issue for consumers.”

The net result of these court cases is that companies are now planning for the worst case scenario in their privacy policies, making it clear that they hold the right to sell your data should ownership of the company change hands. This trend looks likely to accelerate, The Times suggests, as more companies create new data-driven products. And that’s unfortunate – short of a new federal data privacy law, there’s likely little we consumers can do to stop the eventual sale of our data. After all, one of the websites we frequent is bound to go out of business over the course of our lifetime, and when that happens, there’s no telling in whose hands your social security number, credit card data, and home address could wind up.

[Businesswoman via Shutterstock]


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