Office of the Attorney General News Release Archive
Friday, May 18, 2001
CORNYN VICTORIOUS IN 'eTOYS' CASE
Privacy Protection Action Secures Rights of 3 Million Online Customers
AUSTIN - Texas Attorney General John Cornyn supported by the Attorneys General of both Maryland and Delaware, successfully protected the privacy rights of three million customers of failed dot-com e-tailer, eToys.com, which filed for bankruptcy in March in Delaware. As a result, the bankrupt company has agreed to notify customers and obtain their permission before any of their personal information is transferred to the new buyer, KB Toys.
Appearing before a federal bankruptcy court in Wilmington, Del., late this week, attorneys from Cornyn's office successfully structured an agreement with debtor eToys, its official committee of unsecured creditors and KB Toys. This action will result in the destruction of all confidential financial information, such as credit card numbers, provided by eToys customers, who were promised that their personal information would never be sold, rented or transferred to third parties.
Cornyn objected to a proposed transfer to KB Toys unless, prior to the transfer, eToys.com provided each customer with an opt-in notice, which would require an affirmative response from the consumer. Consumers who do not respond to the notice will have their personal information destroyed.
"I am pleased that KB recognized the importance of honoring the privacy rights of these three million consumers, many of them likely from Texas," said Attorney General Cornyn. "By having each customer agree to the transfer, this transaction increases confidence in the Internet by protecting consumers, yet still balances important business interests in e-commerce."
Attorney General Cornyn also successfully struck down attempts by the debtor to limit not only Texas' rights to investigate or bring suit against eToys, but the rights of all 50 states where eToys did business.
"This case should send a message to companies that we will continue to vigorously enforce our consumer protection statutes whether you are in bankruptcy or not," said Cornyn.
An order approving the transaction is expected to be signed today by the Bankruptcy Judge in Wilmington.
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