FTC press release: FTC Announces Settlement With Bankrupt Website, Toysmart.com, Regarding Alleged Privacy Policy Violations (July 21, 2000) (Federal Trade Commission, press release, July 21, 2000 (FTC File No. X000075))
The FTC treats a sale of customer data that breaks the seller's privacy promise as a deceptive practice even in bankruptcy, and settles only for a whole-business sale to a related-market buyer bound by the old promise, with deletion if no such buyer appears. The Commission vote was 3-2.
Dated 17 Oct 2026Source checked 17 Oct 2026Basis: primary text
In the source's own words
“Under the settlement agreement, Toysmart will file an order today in Bankruptcy Court ("Bankruptcy Order"), prohibiting Toysmart from selling the customer list as a stand-alone asset. The settlement only allows a sale of such lists as a package which includes the entire Web site, and only to a "Qualified Buyer"-- an entity that is in a related market and that expressly agrees to be Toysmart's successor-in-interest as to the customer information. ... In the event that the Bankruptcy Court does not approve the sale of the customer information to a Qualified Buyer or a plan of reorganization within the next year, Toysmart must delete or destroy all customer information.”
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