The Consumerist reports that RadioShack, facing bankruptcy, planned to take its customer database and put it up for auction to pay back its creditors, which contains millions of:
- Physical addresses.
- Customer names.
- Email addresses.
- Other identifiable information.
Even for an independent contractor working in IT, this issue is worth following. No matter how big or small your company is, it's crucial to understand how privacy policies work.
Do Privacy Policies Get Liquidated in a Bankruptcy?
While the FTC has stopped other companies in the past, many tech businesses are uncertain about their responsibilities in bankruptcy or merger. Google, Facebook, and other companies leave their privacy policies open-ended.
For this reason, it's important to check your client's privacy policies and know the liability issues surrounding them. To learn about covering these legal risks, check out Errors and Omissions Insurance, which can pay for third-party data liability lawsuits.
- Outline who has access to the private data you store.
- Disclose whether you share data with third parties (e.g., marketers, outsourced IT, or other companies).
- Allow a way for users to contact you about privacy issues.
In RadioShack's policy, the company said it wouldn't sell its customers information to other companies, suggesting this bankruptcy auction is a violation of the contract the company has made with its customers.
In the world of tech, liabilities and risks change every day. While it's crucial to use contracts and policies to protect your company, it's impossible to plan for every contingency. A smart risk management strategy should use privacy policies and contracts, but also have the lawsuit protection that small business insurance can offer.