FTC Settlement With Toysmart.com Allows Limited Sale of Customer List

Owners of defunct Toysmart.com can sell its customer list, but only if the buyer abides by the terms of the Web site’s privacy policy, the Federal Trade Commission said, announcing a settlement with the company.

In a complaint filed this month in U.S. District Court in Boston, the FTC said Toysmart’s proposed sale of its customer list violated its own assurances to customers that their registered information would “never be shared with a third party.”

“Customer data collected under a privacy agreement should not be auctioned off to the highest bidder,” said Jodie Bernstein, director of the FTC’s Bureau of Consumer Protection.

Toysmart attorney Harry Murphy called the settlement “a fair balancing of the needs of creditors with the needs of the customers, protecting the confidentiality of their information.”

The educational toy company, majority-owned by Walt Disney Co., closed in May and filed for Chapter 11 bankruptcy protection in June, soliciting bids for its assets that include about 250,000 customer names, addresses and credit card numbers.