RadioShack Agrees To Mediation After Auction Of Customer Mailing Lists

In bankruptcy court this morning in Delaware, there was a hearing regarding RadioShack’s plan to offer tens of millions of pieces of customer data in its bankruptcy auction. The attorney general of the Shack’s home state of Texas objected to this sale, mostly because the company’s original privacy policy didn’t allow the company to sell customer data to just anyone. Now RadioShack has agreed to mediation after its intellectual property, including those mailing lists, is auctioned on May 11.

Before any of RadioShack’s assets went up for sale, they secured a stalking horse bid from lender Standard General. Much of the controversy over the bankruptcy has been about the question of whether Standard General should be permitted to use hundreds of millions of dollars of RadioShack’s debt to that company as currency to bid with.

What’s in those files that are for sale? Part of the AGs’ problem with the sale of customer data is that the original list of items for sale was kind of vague about what it contained. In response, RadioShack explained exactly what’s in those files. The “transaction data” mentioned in the bidding list went back 5 years except for items with extended warranties, and the data that will be sold does not include credit card numbers, since encrypted credit card information is only rendered unusable after 60 days, once items can no longer be returned. Oh, good. What do you have to worry about if you’ve shopped at RadioShack in the last decade or so?

Specifically, the Debtors’ Customer Database consists of approximately 8.5 million opt-in email addresses, of which approximately 3.1 million were active within the last twelve months, and approximately 65 million complete customer name and physical address files, of which approximately 11.9 million were active within the last twelve months. It is possible to extract consumer files from the Customer Database to account for data considered more relevant for marketing or other purposes.

RadioShack further explains that not many of these addresses are likely to be either current or useful, and that there are surely a lot of duplicates in the databases as well. You can download RadioShack’s response here.

The AGs still had some concerns about the sale, mostly about vetting the buyer. Standard General, the company that bought most of RadioShack’s remaining stores, is the most likely to be interested in the entire package of intellectual property. That package includes RadioShack’s house brands and patents, its domain names, the mailing lists, and the RadioShack name itself.

In a response, the attorneys general explained their continuing concerns with the mailing list sale and with how RadioShack’s attorneys have been explaining the sale:

The State is further concerned by the use of the term “opt-in” to describe the 8.5 million email addresses which have elected to receive email communications from the Debtors. The customers who elected to receive electronic communications from the Debtors were expressly covered by Debtors’ the privacy policy to the same extent as other customers and the State contends the term “opt-in” could be misleading to bidders who may interpret it as willingness to opt-in to the transfer of their data (as the term “opt-in” policy is sometimes used in the industry).

That makes sense: while privacy-minded customers may have refused to give their information at all, people weren’t signing on to have their names and addresses handed over at cut rates to an unknown buyer.

RadioShack Agrees to Mediation Over Sale of Customer Data [Associated Press]