Commentary

FTC's Vladeck: Bankrupt Magazine Must Destroy Subscribers' Personal Information

The defunct XY Magazine, aimed at gay teens and young gay men, used to promise subscribers that it would take extraordinary steps to protect their privacy.

The magazine, which folded in 2007, assured subscribers that it would never reveal their names, boasting: "Please note our amazing privacy policy. We never give your info to anybody." In fact, the publisher went so far as to assure its readers -- particularly teens living with their parents -- that copies were mailed in shrink-wrapped black plastic.

The company's Web site, which went dark last year, likewise promised users that any information submitted online would be kept secret.

This February the magazine's owner declared bankruptcy. At the time, he filed papers stating that disclosure of subscription lists or information about users collected online would threaten public safety.

"If these particular customers' privacy is once breached, such breach would constitute a 'ticking time bomb' that could never be reversed," he alleged. "Data could be sold and re-sold for decades."

He added: "Customers would have no adequate remedy at law and no way to regain their security. Such threat represents a danger of imminent and identifiable harm to public safety."

Two creditors, however, apparently claim they are entitled to that information. Further, they seem to be in talks with a court-appointed trustee to obtain it.

But Federal Trade Commission consumer protection head David Vladeck has gotten involved in the matter and is making clear that the creditors' potential claims take a backseat to users' privacy.

"Any sale or transfer of the data to a new company, new owner, or other third party would directly contravene the privacy representations and could constitute a deceptive practice by the original company or its principals," he tells the creditors in a letter dated July 1. "Such practice also could be unfair. In addition, the receipt of such data by a third party, knowing that such receipt violated the privacy policy, could be unfair."

What's more, Vladeck adds, even if the sole reason the creditors want the information is in order to restart the magazine or Web site, transferring that material still would pose problems. He says that the continued use of personal information about readers "would not necessarily be consistent with the original purpose for which the data was provided."

Vladeck is asking that the data, including email addresses, be destroyed as soon as possible.

Of course, Vladeck and the FTC don't have the final word here. The matter could end up in litigation, in which case a court might end up deciding whether to protect users' information. Still, this letter certainly seems to provide yet more evidence that the current FTC is making privacy a priority.

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