Legislative Highlights Jul/Aug 2000

<h3>Privacy Policy Bill Introduced in Wake of Toysmart.com Bankruptcy Filing</h3>

<p>Sens. Leahy (D-Vt.), Torricelli (D-N.J.) and Kohl (D-Wis.) introduced the "Privacy Policy Enforcement
in Bankruptcy Act of 2000" on July 12. The bill would prohibit the sale of personally identifiable
information held by a failed business if the sale or disclosure of the information would violate the privacy
policy of the debtor in effect when the information was collected. Such information includes a customer's
name, address, Social Security number, credit card number, date of birth and any other identifier that
permits a customer to be contacted.

</p><p>The bill arises from the July 9 chapter 11 filing of Toysmart.com, an Internet retailer that put its
customer lists up for sale as part of the liquidation of the firm's assets, even though the company had a
policy against disclosure to third parties. The FTC filed suit against Toysmart.com for this violation.

</p><p>Other failed web businesses have reportedly sought buyers for personal data. Often, this is one of few
valuable assets of a "dot-com" firm seeking to reorganize or maximize returns to creditors. The legislation
would resolve the conflict between bankruptcy law and privacy policy in favor of consumer privacy.

</p><p>"It is wrong to use our nation's bankruptcy laws as an excuse to violate a customer's personal privacy.
Customers have a right to expect an online firm to adhere to its privacy policies whether it is making a
profit or has filed for bankruptcy," said Sen. Leahy upon introduction of the bill.

</p><p>Bill sponsors hope to attach the bill to the pending, but stalled, Bankruptcy Reform Act of 2000.