EBay amends privacy policy

Online auctioneer eBay Inc. has revised its privacy policy to allow the company to share customer information in the event that eBay or one of its subsidiaries merges with or is acquired by another company.

"It is possible that eBay, its subsidiaries, its joint ventures or any combination of such could merge with or be acquired by another business entity. Should such a combination occur, you should expect that eBay would share some or all of your information in order to continue to provide the service. You will receive notice of such event (to the extent it occurs)," the privacy policy now reads.

The revision, posted a week ago, would explicitly allow San Jose, Calif.-based eBay to transfer that information and avoid the legal hassle the now-defunct Toysmart.com Inc. encountered when it tried to sell its customer list as an asset during bankruptcy proceedings last summer (see story).

Two months ago, a federal judge ruled in favor of a deal in which Buena Vista Internet Group, a subsidiary of The Walt Disney Co., would pay Toysmart $50,000 to destroy its customer list. Burbank, Calif.-based Disney owned 60% of the bankrupt company. (see story).

Both eBay and Toysmart had agreed not to sell customer information to third parties in exchange for the right to post the Truste privacy symbol on their sites.

That promise, and Waltham, Mass.-based Toysmart's subsequent attempt to sell the list, angered privacy groups, including San Jose-based Truste, and gained the attention of the Federal Trade Commission. Both sought to block the sale.

The U.S. House of Representatives and the Senate each recently passed similar privacy protections, and President Bush is expected to sign a final bill soon (see story).

The legislation forbids companies from selling customers' personal information at the time of bankruptcy if they had previously promised they wouldn't do so. However, a sale or lease of the data can go through if it's consistent with preexisting company policy or if the move has come under court consideration.

The change is troubling to Chris Hoofnagle, staff counsel for the Electronic Privacy Information Center in Washington D.C.

"EBay's decision is another reminder that self-regulatory privacy policies have not created an atmosphere that protects individual's privacy," he said. "The idea that they can just change a privacy policy offers no protection. We're living in an era where privacy is illusory."

Hoofnagle said a consumer could not get away with changing the terms of an agreement after the fact, unless both parties agreed. Likewise, companies should not be able to do so.

The current Senate bill does not do nearly enough to protect consumers, he said, and the House bill is almost useless with regard to online privacy.

For more coverage of this issue, head to our Focus on Privacy page

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