Texas Attorney General Seeks to Stop Sale of Online Private Customer Information

Citing privacy concerns, Texas Attorney General Greg Abbott objected in federal bankruptcy court to the sale of online dating service True.com’s 43 million-member database. The database and web site are owned by Plano-based True Beginnings, which filed for Chapter 11 bankruptcy protection more than a year ago and is in the process of selling its assets. Attorney General Abbott provided this statement:

“At a time when privacy is an issue of grave concern to so many, we are taking legal action to prevent an online dating service from selling more than 2 million Texans’ personal information without their consent. The proper course is for True.com and its bankruptcy trustee to seek the customers’ permission before selling their private information to a third party – and that’s exactly what our legal action asks the bankruptcy court to require before the case proceeds.”

True Beginnings sought permission from the bankruptcy court to sell its assets — including the membership database and all information provided by True.com’s customers — to a Canadian-based online dating service. In the court filing objecting to the membership database sale, Abbott argues that the bankruptcy trustee must first give True.com’s members an opportunity to object to the sale of their personal information. True Beginnings has stated that it merely intends to notify members via email that their personal information has been sold.

However, the proposed email notice does not ask customers to first approve the transfer of their sensitive data. Under the current transfer process, to which the Attorney General objects, data will be transferred unless the customer takes direct steps to opt-out. The Attorney General seeks approval for customers to be allowed to opt-in by having them express approval for the transfer of their personal information.

During the sign-up process, True.com customers were told their personal information could not be transferred without their consent. However, ambiguous and deceptive language embedded within True.com’s privacy policy quietly noted that members’ personal information held in the company’s database would be treated as a transferable asset in the event the company was acquired by a third-party buyer. The Attorney General’s legal filing urges the bankruptcy court to require the trustee to abide by the terms presented to customers when they signed up for the dating web site.

The Attorney General’s objection to this sale on the trustee’s terms will be heard in the Plano bankruptcy court, Eastern District of Texas, on Oct. 25.