Trustee Ends Living.com Privacy Flap

Amid a flood of complaints from former Living.com employees, the trustee in charge of the failed dot-com’s bankruptcy proceedings has taken the court papers listing employee salaries, stock options and thousands of customer names and addresses off the company’s Web site.

The decision to post the bankruptcy filing information on the site has raised questions regarding the privacy rights of e-commerce customers and employees. According to sources at the Electronic Privacy Information Center (EPIC), an Internet privacy research group, this is the first instance of such a bankruptcy posting on an e-commerce site.

“This is an issue we’re all grappling with,” Deborah Pierce, staff attorney for the Electronic Frontier Foundation, told the E-Commerce Times. “Public records are the hallmark of an open government. It’s beyond an authority issue. Maybe we need to redefine exactly what a public record is.”

How Public Is Public?

Although bankruptcy records are a matter of public record, they have generally been available only through a court clerk’s office. Personal information can be removed from these records if lawyers make such a request to a court. Creditor lists and docket information are posted online by U.S. federal bankruptcy courts, but personal information is generally omitted from these postings.

Patrick Huffstickler, the lawyer for the trustee, said in published reports last week, “The documents are public record. The same information that is available on the Net is available in the court clerk’s office.”

Is Nothing Sacred?

In the recent past, several other failing e-commerce companies, such as Toysmart.com, have come under scrutiny for trying to sell customer data to other businesses as part of their liquidation. The U.S. Federal Trade Commission (FTC), along with privacy groups and state and federal lawmakers, recently filed suit to stop the Toysmart sale, questioning whether such a sale violates Toysmart’s privacy agreement.

“What we really need is something that is of legal grounding, but the legislation can’t be technology specific,” Pierce said. “We need to get companies to put their fair information practices into their privacy statements.”

Self Empowerment Needed

Pierce explained that with no legal framework backing the public, both customers and employees need to take action on their own to protect their privacy.

People can use “anonymizing” software and encrypted e-mail, Pierce said, but “companies need to try and respect customer privacy. The companies that will be successful are those that will differentiate themselves on this issue.”

Living.com, which sold home furnishings, rugs, garden products and cooking items, had a promising marketing agreement with Amazon.com. However, the company filed for bankruptcy on August 29th, laying off 275 employees.

The Austin, Texas-based e-commerce company had at least 1,000 creditors, with total claims estimated at between $10 million and $50 million (US$).