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After some intense bankruptcy negotiations, Barnes and Noble has finally secured permission to buy Borders’ customer list for $13.9 million. This purchase includes information from former Borders customers, including email addresses, purchase histories, home addresses, and phone numbers. However, no financial information will be transferred to Barnes and Noble.
Even though the initial sale was made on September 26, the sale was not finalized for several weeks due to Borders’ objection to having their customers’ information sold. The Federal Trade Commission’s consumer chief, David Vladeck, agreed with Borders’ concerns.
“In light of the promises Borders made to its customers, we believe it would be appropriate for Borders to obtain express consent from its customers, specifying the potential purchaser, before it transfers the data. The consent process would allow customers to make their own determination as to whether a transfer of their information would be acceptable to them.
For consumers who did not consent, their data would be purged,” he said. Judge Martin Glenn, who has been presiding over Borders’ bankruptcy proceedings, decided it would not be necessary for customers to express permission for their information to be transferred to the new company.
Instead, Barnes and Noble was required to provide former Borders’ customers with the ability to opt out, and have their personal information purged from all databases. Last week, Barnes and Noble CEO, William Lynch, sent an email to 40 million former Borders customers welcoming them to the “Barnes and Noble family.”
The email briefly explained the purchase, and encouraged recipients to take advantage of the opportunity to receive emails with special offers for in-store and online purchases at Barnes and Noble. There was also a note at the bottom of the page with a link giving customers the option to opt out and have their information deleted.
Customers who received this email will have until October 15 to opt out. Former Borders customers who did not provide an email address will have until October 29. After these dates have passed, anyone who has not specifically opted out will automatically have their information transferred to the Barnes and Noble database.
This sale has caused some controversy concerning a company’s right to sell the intellectual property of their customers to another company without express permission. The privacy rights of an individual are highly prized in American society, and Barnes and Noble’s ability to simply buy personal information is upsetting to some individuals.
Senator Richard Blumenthal of Connecticut, recently stated his objections. “The settlement reached between Borders and Barnes and Noble is wholly inadequate and unacceptable. Consumers are unprotected unless they explicitly opt out. Instead, their specific consent should be requested,” he said.
The bankruptcy courts have set a precedent for companies to sell their customers’ information to others in the future. Only time will tell if this sharing of information is determined to be a breach of privacy, or simply a new way for businesses to reach out to customers.
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