David Vladeck, Director of the FTC’s Bureau of Consumer Protection, recently sent a letter to creditors of XY Magazine, warning that the creditors’ acquisition of personal information about the debtor’s subscribers and readers in contravention of the debtor’s privacy promises could violate the Federal Trade Commission Act (“FTC Act”).

The Federal Trade Commission has had a full mailbox recently. It received a request to investigate caffeine-infused malt beverages and a request for a new privacy law. And the FTC sent a cautionary letter to a magazine addressing privacy issues in a consumer bankruptcy.

Expect the unexpected from your Web site privacy policy. In a handful of cases, including two which were recently decided, companies have been thwarted in various, unexpected ways by the commitments made in their online privacy policies.

Are your intellectual property litigators reading your privacy policy?

After receiving a letter from David Vladeck, the Director of the Bureau of Consumer Affairs at the Federal Trade Commission, a bankruptcy judge allowed the destruction of personal information of gay teens who subscribed to the now defunct XY magazine.

The judge presiding over the bankruptcy proceeding of the operator of a Web site and magazine aimed at gay teens has approved a settlement allowing the destruction of personal information of users rather than a sale to creditors as part of the bankruptcy estate. The court approved the settlement after the Federal Trade Commission raised objections to the sale, citing the Web site sign-up confirmation page, which stated that "[w]e never give your info to anybody," and a similar statement directed to subscribers of an associated print magazine.

The Supreme Court’s 2010-2011 term began in October, and it is expected to conclude by the end of April. We have been monitoring the decisions of our nation’s highest court and you may have already read some of the summaries of the major decisions written by Larkin Hoffman attorneys. This update provides a brief look at some of the cases that have been scheduled for oral argument since our last update in November.

RadioShack filed for Chapter 11 bankruptcy in Delaware bankruptcy court in February, seeking a court-supervised sale of $1.2 billion in assets. Included in the sale is a database of customer information from about 1,700 stores regarding RadioShack’s 117 million customers.

Much has been written of late about data breaches and the liabilities for the unauthorized acquisition of Personally Identifiable Information (PII) from institutions. But what about when the alleged “breach”--the release of information --is voluntarily and/or legally compelled? What are the risks to businesses when they sell assets that include PII? What liabilities do they face? What are the rights of customers?

Radio Shack – The pioneer of PII data collection

It long has been the law that unpaid creditors of an insolvent debtor can complain if the debtor sells or otherwise transfers any of its assets for less than their fair value. Assume, for example, a company in financial distress sells one of its manufacturing plants to an unrelated purchaser for $15 million. If an unpaid creditor of the seller can demonstrate the fair value of the facility at the time of the sale was $20 million, the purchaser may be required to account to the seller, or its creditors, for the $5 million difference.

At the request of the FTC and the State of Florida, last week, the Southern District Court of Florida temporarily shut down two major telemarketing operations.