Sports Authority is going to auction off customer emails. Can it do that?

If you were a Sports Authority customer, beware – your data could now belong to Dick's Sporting Goods, following a bankruptcy auction on Thursday. 

|
Mike Blake/Reuters/File
A Sports Authority store is shown in Encinitas, Calif., in March after the company filed for bankruptcy. This week the company sold the emails of its former customers for $15 million.

Dick's Sporting Goods announced on Thursday that it had won the intellectual property of former sporting goods retailer Sports Authority in an auction, buying the personal information of thousands of former Sports Authority customers. 

Dick's Sporting Goods paid just $15 million for Sports Authority's intellectual property, a minuscule sum for ensuring that Dick's can corner the market for sporting goods sales in the United States. Dick's shares rose 6 percent after the sale.

Although consumers have become more wary of how their data is used by large retailers (particularly after high profile data breaches at companies such as Target), many are still unaware that their information could come up for sale when companies such as Sports Authority go bankrupt.

"Customer emails are stolen every day [but] they lack awareness that this is a possibility," Hemu Nigram, a cybersecurity expert, told The Los Angeles Times. "The auction is raising awareness of another way customer data can be sold without even thinking about it."

Sports Authority filed for Chapter 11 bankruptcy in March, forcing it to auction off assets in order to pay creditors – assets that include customer files and email addresses.

Thursday's auction saw 114 million customer files and 25 million email addresses pass into Dick's Sporting Goods' hands, a purchase that experts say could help Dick's target potential customers in regions formerly dominated by Sports Authority.

"It's extremely valuable data for companies to identify customers who are looking for a new home," Nigram told The L.A. Times, speaking to the value of data sales for companies seeking to dominate the same market.

While selling consumer information at auction is technically legal, if companies have already stated that any data they collect could be sold. Sports Authority had such a policy.

And the sporting goods company is not the only one. When Radio Shack underwent bankruptcy proceedings last year, the company attempted to sell consumer information despite a privacy policy that guaranteed that such information would not be sold.

Finally, after backlash from the Federal Trade Commission and from several of its suppliers, Radio Shack agreed to destroy most of the records it held for its 117 million customers.

"This settlement is a victory for consumer privacy nationwide," said Texas attorney general Ken Paxton, according to CNN. "It reflects a growing understanding of the importance of safeguarding customer information."

Nevertheless, some consumer information (though limited), was passed on to General Wireless, which purchased Radio Shack's assets at auction.

Consumer privacy advocates say that this sale is part of a chilling trend toward data sales. According to a 2014 CBS News report, data brokers are selling consumer information far more often than most consumers realize.

Companies know most things about you, experts say, from what medications you are on to what clothes you like to wear. And "the type of company that would be most entertained by that information is most likely to exploit it," privacy attorney Jay Edelson told The L.A. Times. "Whether it's identity theft or a scheme to defraud people by selling other things to them or reselling that list."

Companies are well aware of the value of this strange asset, which can direct them to new customers or help target interests. There was more than one bidder for Sports Authority's customer information. Sports Direct International Plc (a British company) also submitted a bid for the customer information, offering $13 million.

Dick's and Sports Authority still have to finalize the deal, and a US bankruptcy court judge has to approve it, the company said in a regulatory filing. The court's hearing is scheduled for July 15.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Sports Authority is going to auction off customer emails. Can it do that?
Read this article in
https://www.csmonitor.com/Business/2016/0701/Sports-Authority-is-going-to-auction-off-customer-emails.-Can-it-do-that
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe