Stop, Drop, and Roll

In a smidgen of grandstanding, seal-of-approval privacy firm TRUSTe ran to the Federal Trade Commission
to tattletale on Toysmart’s plan to
auction off its customer list under bankruptcy proceedings. Now the FTC has
filed a lawsuit against the failed dot-com toy store to straighten this
whole mess out. Talk about piling on.

The whole issue revolves around Toysmart’s seemingly benign privacy policy
that stated, “When you register with, you can rest assured
that your information will never be shared with a third party.” I suppose
the company should have had the foresight to include, “unless of course we
blow through our last $10 million prior to our moonshot IPO, in which case,
all bets are off.” Ah well, hindsight’s always 20-20.

The theory goes, that if we sit up here on our high horse and allow
Toysmart to sell its prized customer list, it’ll be a slippery slope that’s
sure to see more defunct Internet companies follow suit. And, of course,
there’s the issue that Toysmart did promise not to leak the private
information, although unconfirmed sources have indicated the e-tailer might
have had fingers crossed behind its back at the time.

The real humor in this situation is that Disney
owns a majority interest in Toysmart. While Mickey has been doing his
darndest to keep the sinking cyber-ship at arm’s length and generally doing
a decent all-around job of ignoring Toysmart’s dire straits, the FTC’s
latest move dropped a potential hot potato in the Mouse’s lap.

Companies are all too aware of DoubleClick’s fallout
over its surreptitious data gathering activities last year. Privacy
advocates put a healthy scare into the online ad agency when it was learned
that DoubleClick had plans to play connect the dots with its 5 billion
weekly ads and the newly acquired Abacus’ 2 billion consumer transactions.
And after Microsoft’s legal defeat, nary a
publicly-traded company wants the government as a houseguest. Now when
advocates start calling for government intervention, CEOs start sleeping
with one eye open.

When the FTC flicked a cigarette butt out the car window, or in this case,
filed a showboating lawsuit, Walt Disney officials scrambled to put out the
brush fire. Despite not being named a party to the suit, Disney knows that
guilt by association can cause just as much damage. If there’s even a hint
that a government agency is looking to make a name for itself – stop, drop,
and roll.

Without any obligation to do so, Disney has rushed forward and offered to
buy Toysmart’s customer list and burn it, or to be more politically
correct, put it out to pasture. That’s a smart move, and it comes dirt
cheap, compared to the potential backlash from consumer advocacy groups who
might be inclined to fry a bigger fish.

Any questions or comments, love letters or hate mail? As always, feel
free to forward them to [email protected].

Want my daily missives delivered with your morning toast and coffee? Sign
up for my DealTracker newsletter.

News Around the Web