Toysmart.com Customer Profile Advisory; TRUSTe Seeks to Stop Potential Sale of Customer Data

June 29, 2000 – TRUSTe today advises the Web community that it has learned that Toysmart.com, a participant in the TRUSTe program, may be planning to sell its customer profiles as part of the company's liquidation. These customer profiles, which may include personally identifiable information, were collected from users under the TRUSTe-approved privacy policy that no information would ever be shared with a third party without the express consent of the user.

TRUSTe further believes that Toysmart.com may be using its creditors recent bankruptcy filing as justification for the sale. On June 9, 2000, Toysmart.com filed for Chapter 11 proceedings with the bankruptcy court in the Commonwealth of Massachusetts. The hearing is scheduled for July 26, 2000.

Despite repeated efforts to contact staff within the company, TRUSTe has not received a reply.

TRUSTe believes that the sale of this data is ethically wrong and will do everything within the law to protect consumers from this potential invasion of privacy.

The strong arm of the TRUSTe program is the internationally enforceable contract that each Web site must sign as a prerequisite to displaying the privacy seal. Companies that deviate from their policy can be found in breach of contract.

TRUSTe has initiated its escalation process and is investigating methods of removing Toysmart.com from its privacy program. TRUSTe has also alerted this case to the Federal Trade Commission for further review under the suggestion that the potential sale may be classified as unfair and deceptive marketing practices. Under section five of the FTC Act, the Commission has enforcement authority against such practices.

TRUSTe will continue to monitor progress with this case and report any decisions that have been made to the Web community.

 

Wiley Rein LLP