It's widely understood that when a retailer such as Borders goes bankrupt, customer data-including data protected by the retailer's privacy policy-is up for grabs. Forget about privacy; a bankruptcy court can auction off that personal information to the highest bidder, and there's nothing the retailer has to say about it, right? Not so fast. Federal bankruptcy law says a retailer's privacy policy can still protect that data, but only if the policy is in force at the time of the bankruptcy.
And failing to take customer privacy into account can have serious consequences-the Federal Trade Commission has a decade-long history of going after retailers with unfair or deceptive trade enforcement actions-enforcing customer privacy even in some cases where a retailer has gone belly up.
