FTC: Toysmart Betrays Privacy Promise
B O S T O N, July 11 -- The Federal Trade Commission on Monday filed a lawsuit against Toysmart.com, accusing the bankrupt online toy-seller of breaking a promise to customers that it would never share private information about them.
The Walt Disney Co. owns ABCNEWS.com and has a majority stake in Toysmart. (See statement below)
In a complaint filed in U.S. District Court in Boston, the FTCsaid Waltham, Mass.-based Toysmart is violating its own assurancesappearing on its Web site that “when you register withtoysmart.com, you can rest assured that your information will neverbe shared with a third party.”
Toysmart ceasedoperations in May and began soliciting bids for its assets,including customer lists and profiles. Internet privacy activistsprotested, claiming that if the sale of that information wereallowed, it could encourage a wave of other failing dot-coms toabandon privacy assurances in return for cash.
Toysmart has solicited bids for client information, but FTCattorney Ellen Finn said it was unclear whether Toysmart hasalready sold any. The complaint seeks to block bankruptcy actionsuntil the privacy question is addressed.
Untrustworthy?
Toysmart’s privacy guidelines had been certified by TRUSTe, aSan Jose, Calif. company that has given its seal of approval tomore than 2,000 sites that have met its criteria for safeguardingtheir customers’ privacy. It was TRUSTe that first brought Toysmartto the FTC’s attention.
“Even failing dot-coms must abide by their promise to protectthe privacy rights of their customers,” FTC Chairman RobertPitofsky said in a news release.
There was no answer at the company’s headquarters Monday. Awoman who answered the phone at The Recovery Group, a Bostoncompany handling Toysmart’s bankruptcy, referred questions to thecompany’s attorney, Harold Murphy, who did not immediately return aphone message seeking comment.
Finn said the commission would try to reach an agreement withToysmart before a July 26 hearing scheduled in federal bankruptcycourt.
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