Views on Handling Personal Data in Bankruptcy From Scott Vernick of Fox Rothschild LLP

July 13, 2015 – In The News
Privacy & Security Law Report

Reproduced with permission from Privacy & Security Law Report, 14 PVLR 1271 (July 13, 2015). Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com.

Scott L. Vernick was quoted in the Privacy & Security Law Report article, “Views on Handling Personal Data in Bankruptcy From Scott Vernick of Fox Rothschild LLP.” Full text can be found in the July 13, 2015, issue, but a synopsis is below.

The recent bankruptcy proceeding for RadioShack Corp. raised issues for state attorneys general and the Federal Trade Commission (FTC) regarding the way the company’s consumer data would be handled.

The bankruptcy court balanced corporate asset value and privacy protection for consumer data in the proceedings by only allowing for the sale of certain data, while ordering the destruction of other information.

“I was not surprised,” Scott L. Vernick, a noted privacy attorney, said of the court’s handling of issue. “The court appointed a privacy ombudsman, and mediation took place in Texas with the state attorneys general and the FTC.”

“I think the settlement is actually acceptable, from the standpoint of what the buyer was looking for,” Vernick said.

“Standard General LP – the hedge fund buyer – does not end up with credit card information, Social Security numbers, telephone numbers or dates of birth,” he said. “I do not think the buyer needed any of that. What it was interested in was some type of contact information for the purpose of continuing to sell product. In that sense, Standard General did reasonably well because it received the email addresses provided by any customer who had requested product information during the last two years, although any of those customers will have the right to opt out.”

“The telephone numbers might have been helpful, but if I’m Standard General, what is the core nucleus of people to whom I want to market? You can argue two years, three years, four years – maybe the company should have received some additional data,” Vernick said. “However, I think that, in the end, the company got valuable information for when it re-brands the RadioShack stores. While you could quibble with how many years of data Standard General received, I thought it was a fair result.”

“I do not know how the other information would be useful,” Vernick added. “Certainly with the payment card information, Social Security numbers and the dates of birth, that’s where there is real opportunity for havoc, depending on what happens to them.”

Click here to view the full interview.