Why Barnes & Noble Was Able to Get Your Borders Data


NEW YORK (MainStreet) – During the past few months, Borders email subscribers have seen some interesting communications from the company. Earlier in the year Borders Rewards members received an email from the company’s CEO, Mike Edwards, informing them that the retailer would file for bankruptcy and close many stores. A few months later, after the company failed to find a buyer, he sent another email announcing that Borders would shut down permanently.

These were strange missives to receive on a mailing list usually reserved for bombarding subscribers with news of sales and special discounts. But undoubtedly the weirdest moment came this weekend, when subscribers got an email from William Lynch – better known as the CEO of Barnes & Noble, one-time competitor of Borders.

Borders liquidated its assets as it prepared to close its doors, and in addition to selling off the chairs and bookshelves, it also sold off its list of email subscribers to the highest bidder. Lynch’s email informed former Borders customers of this fact, and also made it clear that they had every right to opt out and be removed from the list. The company was, to its credit, very upfront with customers in giving them an easy way to get off the mailing list.

Still, some customers were taken aback at the fact that Borders had sold data to a third party, something that many retailers promise never to do. Indeed, a look at an archived version of Borders’s old privacy policy makes it very clear that “[Borders does] not rent or sell your information to third parties.”

However, that privacy policy has evolved over time. As the Federal Trade Commission points out in a letter raising concerns over the sale, Borders amended the language of its policy in 2007 to include the proviso that “Circumstances may arise where for strategic or other business reasons, Borders decides to sell, buy, merge or otherwise reorganize its own or other businesses… In the event that Borders or all of its assets are acquired in such a transaction, customer information would be one of the transferred assets.”

The FTC’s letter, penned by Bureau of Consumer Protection Director David Vladeck two weeks before the sale was finalized, argued that this provision only applied to situations in which Borders was acquired by another entity and continued operating as a retailer – not a liquidation of assets, as was the case. Still, it’s hard to argue that Borders didn’t cover its bases here, and Barnes & Noble has likewise taken appropriate steps by giving customers two weeks to opt out and even taking out a full-page ad in USA Today informing former Borders customers of the situation.

Still, there are a few minor privacy concerns, most of them surrounding the email itself. Paul Stephens, director of policy and advocacy for the nonprofit group Privacy Rights Clearinghouse, says that a single email and a two-week opt-out window may not be sufficient to inform all customers of the situation.

“Is 15 days a long enough period?” he asks. “Is it possible that this email is going to go into a spam filter?”

Any customers who miss out on the notification would by default have their information – including their name, address and DVD purchase history – transferred over to the Barnes & Noble database. Save for a data breach, the main concern here would be if Barnes & Noble had a privacy policy appreciably different from Borders’s.

A quick glance at the new policy doesn’t turn up any major differences, though consumers should read it anyway. There is, for instance, the standard provision (found also on the former Borders privacy policy) that informs users that the company would turn over customer data if they were compelled to do so by a law enforcement agency. If you’re not comfortable having the FBI find out about your DVD purchase history, then consider opting out. (Given that this process is being carried out under the supervision of a bankruptcy court, Stephens says that it’s highly unlikely that Barnes & Noble would try to do anything fishy like hoarding the information of people who asked to opt out.)

Finally, Stephens points out one notable omission in Lynch’s email: The CEO neglects to mention that the company was legally compelled in bankruptcy court to inform former Borders subscribers of its purchase and offer the opt-out.

“They were using [the email] as a marketing opportunity, but the real reason it was sent out was that they were required to do so,” he says. “It may be the right thing to do, but they were legally obligated to do it. Don’t pat yourselves on the back.”

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