Toysmart to Destroy Data, Be Paid

Toysmart.com, a defunct online toy store, will be paid $50,000 and have its customer database destroyed rather than being sold off to pay creditors, the Federal Trade Commission said.

In the settlement, which is to be filed by today, an Internet unit of Walt Disney Co. will pay Toysmart $50,000, and the toy company will destroy its own records. Toysmart is majority-owned by Burbank-based Disney.

Toysmart.com had assured its customers that their personal information would never be shared with a third party, but the company took out an advertisement in the Wall Street Journal to sell the database after going out of business in May.

The FTC and the attorneys general of 42 states had sued Toysmart to keep it from divulging the data, which included names, addresses, and credit card numbers.

In July, the FTC reached a settlement with Toysmart that allowed the company to sell its electronic assets if the purchasing company abided by the same privacy policy. But a federal Bankruptcy Court refused to accept the deal, waiting to see if there were any potential buyers.

No company came forward to buy the 250,000-name database.