The US Federal Trade Commission opposed the proposed sale of sale of the information that details the transactions, names, addresses, phone numbers and e-mail addresses of around 250,000 Toysmart customers.
In Europe, data protection laws regulate the destruction of personal information such as customer details. However, the US has no equivalent law. Instead, the FTC relied on Toysmart’s own privacy policy which promised not to disclose the personal information of its customers to third parties. It successfully argued that to sell the data would be in breach of the policy.
The proposal to "buy and destroy" came from Buena Vista Internet Group, a subsidiary of Walt Disney Co. which owns 60% of Toysmart. The sum offered was $50,000. It is thought that the offer was made to end the negative publicity in the case.
Judge Carol Kenner this week ordered that the payment should be made but that list should not be transferred to Disney and should instead be held by Toysmart’s lawyers until all claims against the company are settled. Thereafter, the list must be destroyed and the company should provide an affidavit to the court to confirm its destruction.