The sale of Borders’ assets – including its customer database – has been halted over a legal dispute sparked by customer privacy concerns.
Borders, which filed for bankruptcy in February 2011, put intellectual property including customer data, and in some cases credit card numbers, up for auction last week.
Barnes & Noble successfully bid $13.8m (£8.9m) for the intellectual property, but the sale has been postponed by a US judge.
In 2008, Borders had introduced a privacy policy that said customer data may be sold to third parties. However, many customers had signed up before that, and a legal expert appointed by the court advised that these customers should be allowed to opt out of their data being sold.
Barnes & Noble disputes this, saying its own privacy policy is sufficiently robust to protect the interests of the customers in question.
The Federal Trade Commission waded in late last week, expressing its concern that “any sale or transfer of the personal information of Borders’ customers would contravene Borders’ express promise not to disclose such information and could constitute a deceptive or unfair practice”.
“We recognise, however, that bankruptcy may present special circumstances, including the interest in allowing a company to get back on its feet,” it added.
Judge Martin Glenn has delayed his decision until this week.
Last month, Gartner analyst Carsten Casper predicted that “virtually all” companies will be forced to review their privacy policies this year or next, and around half will have to change them, prompted by new regulatory requirements, cloud computing adoption and new technologies such as location-based services. But he also warned that “privacy programmes will remain chronically underfunded”.
“The value of privacy and the sensitivity of personal information are impossible to determine without context,” Casper wrote. “Legal requirements are a bad guideline as they trail technical innovation and cultural change by several years.”
