Toysmart.com was owned by a Disney company that began advertising, promoting and selling toys online since January, 1999. In September, Toysmart became a licensee of TRUSTe , an organization that ensures the privacy policy of online businesses and displays its seal and trademark. It indicated the privacy policy that personal information is never shared with a third party would be safe when selling to customer.
However, Toysmart faced privacy issues. Toysmart decided that displaying the TRUST of trademark but did not give fully information to consumers. It sells customer information without providing former customers notice or giving them an opportunity to block the sale or use of their personal information. Therefore, the information would not remain secure and confidential. The Federal Trade Commission (FTG) sued Toysmart to block the sale of customer database that violated consumer protection laws and the privacy rights of customers.
Toysmart was faced with a difficult choice. As an online company, Toysmart did not have the same type of material assets that are most usually associated with bankrupt businesses. There were only few tangible assets such as warehouse full of toys to be sold to the highest bidder.
Instead, Toysmart was a faced with the reality that their assets lay in the information they had obtained from their customers. Based on these factors, Toysmart was faced with complex situation. They could either choose to abide by their promise to never share their customers’ personal information with third party and maintain their millions of dollars or worth of debt, or they could advertise to sell the customer information and have the possibility of lessening their debt.
It was found that toysmart.com had violated the Children’s Online Privacy Protection Act (“COPPA”) because it collected personal information from children under the age of 13 without requiring parent’s consent. This was in direct relation to the contests toysmart held on its website that children could enter by electronically sending their name and age. Finally, United States District Court of Massachusettes found that toysmart actions will injure customers through the United States by invading their privacy.
After Toysmart went bankrupt, under a settlement agreement with the Federal Trade Commission, the customer database was destroyed. Toysmart plays in a role that they are not only acting in an unethical manner by selling customers’ personal information without their consent, but also shows the image of the company runs without regard for deceiving customers.
It was found that toysmart.com had violated the Children’s Online Privacy Protection Act (“COPPA”) because it collected personal information from children under the age of 13 without requiring parent’s consent. This was in direct relation to the contests toysmart held on its website that children could enter by electronically sending their name and age. Finally, United States District Court of Massachusettes found that toysmart actions will injure customers through the United States by invading their privacy.
After Toysmart went bankrupt, under a settlement agreement with the Federal Trade Commission, the customer database was destroyed. Toysmart plays in a role that they are not only acting in an unethical manner by selling customers’ personal information without their consent, but also shows the image of the company runs without regard for deceiving customers.
Related Link:
http://www.law.duke.edu/journals/dltr/articles/2001dltr0010.html
http://pubs.acs.org/subscribe/archive/ci/31/i12/html/12legal.html
http://search2.austlii.edu.au/au/journals/PLPR/2001/1.html
1 comments:
oh, I never thought that Toysmart wl become insolvent co.Well, read through this post.I quite undertstand what happen to the co.That's really unethical manner. So bad, hope this situation wl not happend in other co.
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