Bankruptcy Judge Delays Sales of Borders Customer Lists to Barnes and Noble Over Privacy Concerns

Posted on September 23, 2011

A Manhattan bankruptcy judge has delayed the sale of Borders' customer lists and personal information to Barnes and Noble over privacy concerns. Bloomberg reports that a privacy expert testified in court and raised a number of questions about the transfer.

The Video Privacy Act of 1988 makes it illegal to disclose customers' personal information about what movies or other audio-visual information they rent or buy, including adult films. U.S. Bankruptcy Judge Martin Glenn said the privacy rights of the 48 million customers must be clarified, and moved the hearing to Monday. Apparently, none of the attorneys had considered privacy as an issue in the sale. Judge Glenn asked the lawyers in the case, "Does Borders have the ability to e-mail blast to all customers in its database, essentially giving them the right to opt out of any sale or transfer?" No one knew the answer.

The Federal Trade Commission's Bureau of Consumer Protection and the New York Attorney General's office (who represented 25 states' attorneys general) told the judge that they were worried that customers' personal information might be compromised by the transfer. Presumably credit card information will be included in the transfer.