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Where Customer Data Goes In Bankruptcy

Over the years some companies thrive, while others that may have once thrived, fail. Some failing companies declare bankruptcy as a means to close up their company. Don’t be too quick to think this doesn’t affect you, as their customer. It is important to be an informed consumer and understand what happens to your customer data in such bankruptcy cases.

According to a New York Times article published in 2015, many companies include a clause in their user agreements saying user information can be transferred to another party as part of a larger transaction. This includes how users shop and what products they prefer as well as the geographical area they reside in.

When Sports Authority declared bankruptcy and began its liquidation sale this summer, the company sold the customer data it had on its 25 million customers to Dick’s Sporting Goods for $15 million. In such liquidations, the customer data may be the most valuable asset the company is relinquishing. It is not uncommon for there to be multiple offers, especially from competitors, for the data. The longer the company has been around, the more depth of data they generally can offer.

As a customer, you do have options if you act fast. For a small period of time as the transfer is occurring, Sports Authority notified their customers with an email allowing them to opt-out. After the transaction is complete, however, you will have to opt-out with the new company if you wish to stop receiving communication.

A New York Times analysis of the top 100 web sites in 2015 found 85 of those sites had added terms, which allowed for the transfer of customer data if the company ever merged with another company or declared bankruptcy.

If you need to know more about any type of bankruptcy, contact your Missouri bankruptcy attorneys at the Westbrook Law Group LLC.