EBay Amends Its Privacy Policy

Would allow the transfer of customer information if merger or acquisition occurs

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," the privacy policy now reads.

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

Two months ago, a federal judge ruled in favor of a deal in which Walt Disney 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.

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

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

EBay, however, has Truste's support. "EBay actually checked with us before they changed their privacy policy, and we gave them the OK because they are not taking the control away from the consumer," said Dave Steer, a spokesman for Truste.

Before changing the policy, eBay agreed to have Truste oversee the transfer of customer information in the event of an acquisition or merger.

Steer said all customers would be notified via e-mail and could choose not to have their information transferred to a third party.

"Without choice there is no privacy," Steer said.

Truste would also suggest posting any plans to transfer information to a third party on the eBay site, for those whose e-mail addresses may have changed, said Steer.

"It's going to be difficult. There are going to be cases that always fall outside of enforcement [of the privacy protection agreement between eBay and Truste]," Steer said.

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.

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 pre-existing company policy, or if the move has come under court consideration.


Copyright © 2001 IDG Communications, Inc.

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