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A Dot-Com Double-Cross Threatens Net Privacy
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Source: San Francisco Chronicle
A Dot-Com Double-Cross Threatens Net Privacy
Thursday, July 13, 2000
�2000 San Francisco Chronicle
WHEN A DOT-COM crashes and burns, it's not the beige computers, office dividers or even the accounts
receivable that bankruptcy bidders may want.
One valuable leftover is the data on customer buying and lifestyle habits. It's the personal information learned
through e-commerce transactions and questionnaires.
Magazines, automakers and other marketers have peddled purchaser lists for years. What makes the Internet
version different is the pervasive nature of the information, and in some cases, a double-cross pull on customers
who were promised confidentiality. Personal privacy is lost. Also lost is confidence in e-commerce as trustworthy
and reliable.
The case of the moment is Toysmart.com. which closed down in May. ``You can rest assured your information
will never be shared with a third party,'' customers were told during its brief commercial life. Buying patterns,
children's birthdays, street and e- mail addresses and phone numbers were collected by Toysmart computers.
After shutting down, Toysmart tried to go back on its word. Through a bankruptcy service, it sought to peddle the
company's remains, including customer lists and data.
The Federal Trade Commission has filed suit to stop the sale. The Walt Disney Co., Toysmart's primary financial
angel, may buy the list itself to head off legal trouble. A happy ending, in modern e-Disney style.
Privacy groups are alarmed by the experience. Especially angry is TRUSTe, a San Jose nonprofit that bestows its
good-business label on business Web sites in exchange for a code of conduct. TRUSTe filed arguments
supporting the federal lawsuit because Toysmart went back on its privacy pledge.
As other Internet firms fail or merge, the pressure on privacy will grow. Boo.com and CraftShop.com both sold
off customer data lists after closing down.
Questions about privacy abuses should first be considered by industry self-regulation or TRUSTe's brand of
policing by private agreement. The pro-business mood in Washington makes it unlikely that the rapidly-evolving
Internet marketplace will be reined in.
But abuses need an answer. A good-faith agreement, such as Toysmart's promise to customers, may need
enforcing by federal authorities who police the Internet marketplace. Privacy must be maintained.
�2000 San Francisco Chronicle Page A22
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