Office of the Attorney General News Release Archive

Monday, September 25, 2000

CORNYN ANNOUNCES PRIVACY SETTLEMENT WITH LIVING.COM

Protects Texans privacy rights

AUSTIN - Texas Attorney General John Cornyn today filed a lawsuit and joint settlement agreement with bankrupt Internet retailer living.com in U.S. Bankruptcy Court in Austin. If approved by the court, the settlement will resolve the lawsuit which sought an injunction to prohibit living.com from selling customer lists and personal financial information.

On Aug. 31, 2000, living.com filed a voluntary Chapter 11 bankruptcy after ceasing business operations a few weeks earlier. The company's privacy policy stated, "...living.com does not sell, trade or rent your personal information to others without your consent. We may choose to do so in the future with trustworthy third parties, but you can tell us not to by sending a blank email to never@living.com...." The Attorney General's office contacted living.com's bankruptcy attorneys to raise concerns about the company selling their customers' information. The Deceptive Trade Practices Act gives the Attorney General authority to act on behalf of Texas consumers to enforce and restore their privacy rights.

"It is important that Internet companies respect Texans' privacy rights whether the company is in the black-or in the red. This settlement will set the standard for future settlements and protects Texans' privacy rights," said Attorney General John Cornyn. "I appreciate the cooperation of the Court-appointed Bankruptcy Trustee and her counsel in reaching this important settlement agreement."

The settlement agreement, filed today, still requires the final approval of the bankruptcy judge. Under the terms of the proposed settlement, the court-appointed bankruptcy trustee will oversee the destruction of the customers' personal financial data such as credit card, bank account and social security numbers. While the bankruptcy trustee may sell or transfer the customer list-excluding credit card, bank account and social security numbers--she may do so only after giving notice to all of living.com's customers and giving the consumers an opportunity to opt-out of the proposed sale. Under further terms of the settlement, the bankruptcy judge must approve the notice and opt-out form to be sent to all of living.com's customers. Under the opt-out form, a customer must specifically inform the trustee, via email, that he or she does not consent to proposed sale or transfer of the personal information.

Last July, Attorney General John Cornyn was the first to file an objection in U.S. Bankruptcy Court in Boston regarding the sale of customer lists by another bankrupt dot com, Toysmart.com. Toysmart.com also had promised consumers that personal information submitted to these companies would not be disclosed to third parties. Yet, they were willing to sell this information in bankruptcy proceedings. Toysmart.com withdrew from sale in the bankruptcy court its customer information but reserved the right to ask the bankruptcy court for permission to sell it should it find a buyer. The Attorney General will continue to vigorously fight any proposed future sale, should Toysmart.com again seek to sell its customer information without adequate notice and consent to Texas consumers.

The Texas Internet Bureau within the Texas Attorney General's office monitors privacy issues and encourages Texans with privacy concerns to contact our office through reporting forms on the Attorney General's web site at www.oag.state.tx.us or 1-800-252-8011. Also on the web site, consumers can find helpful tips for safe surfing and shopping on the Internet.

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Contact Mark Heckmann, Heather Browne, Tom Kelley or Tom Kelley at (512) 463-2050
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