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FTC Aims to Stop Sale of Toysmart.com Customer Data

Toysmart.com - owned largely by the giant Walt Disney Company - made headlines in May when it suddenly stopped taking orders on its Web site dedicated to educational fun for kids, and again in June when it filed for Chapter 11 bankruptcy protection and began running advertisements in newspapers offering to sell assets that includes its customer database.

Ironically, Toysmart.com was a member of TRUSTe initiative and, as such, received the industry-backed privacy organization's seal of approval by promising not to offer its customer data to third parties without the approval of those customers.

In late June, TRUSTe announced it would be taking steps it hoped could stop the data selloff, including notifying the FTC that the proposed sale could be seen as "unfair and deceptive marketing practices."

A report in the Wall Street Journal today said that the FTC agreed in a closed session Friday to seek a preliminary injunction in federal court today. The report said settlement talks with Toysmart.com broke off Friday, but that government lawyers said a final attempt to settle the case could be made again today.

In an alert to consumers about the potential data sale on June 29, TRUSTe wrote that it believes "the sale of this data is ethically wrong and will do everything within the law to protect consumers from this potential invasion of privacy."

"The strong arm of the TRUSTe program is the internationally enforceable contract that each Web site must sign as a prerequisite to displaying the privacy seal," it said. "Companies that deviate from their policy can be found in breach of contract."

TRUSTe can be found online at www.truste.com.

Reported by Newsbytes.com, www.newsbytes.com.

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