TRUSTe Files Objection to Federal Trade Commission Consent Agreement With Toysmart.com – Agreement Falls Short of Protecting Privacy Online

August 8, 2000 – TRUSTe today advises the Web community that it has filed an objection to the Federal Trade Commission (FTC) consent agreement with Toysmart.com.

In the objection, filed with the United States Bankruptcy Court, TRUSTe requested that the court deny the FTC's consent agreement in light of its failure to ensure that Toysmart.com's users will be provided with adequate notice of the sale and choice to prevent the sharing of their personal information.

TRUSTe applauded the FTC for its significant effort in seeking to resolve the Toysmart.com matter indicating that it "demonstrates that websites must take privacy seriously as a matter of public policy and law." However, TRUSTe argued that the consent agreement falls short of what is needed to give users full control over their personal information to protect their privacy online.

TRUSTe will continue its current motion to halt the sale of Toysmart.com's customer database under conditions of inadequate notice and consent. The next hearing is scheduled for August 17th, 2000, at the United States Bankruptcy Court for the District of Massachusetts.

TRUSTe alerted this case to the FTC in late June 2000 under the suggestion that Toysmart.com's intended sale of customer data would violate the FTC's prohibition against unfair and deceptive practices. TRUSTe filed its own motion with the United States Bankruptcy Court arguing that the sale of customer personally identifiable information would breach the contract between Toysmart.com and TRUSTe, would violate user's expected privacy rights, and could irreparably harm the state of trust and confidence in the Internet.

On July 20th, 2000, the FTC entered into a consent agreement with Toysmart.com indicating that the company's website assets could only be sold to a business in the family commerce market that would serve as a successor-in-interest as to the uses of the customer information.

TRUSTe will continue to monitor progress with this case and report any decisions that have been made to the Web community.

 

Ponemon Institute