Big Data Meets Bankruptcy
Companies have collected consumer data as long as there have been companies, and had merchants note customer preferences to determine what they would sell. In the 1980s, companies used customer transactions for directmail marketing, and with the advent of the information age in the 1990s, online companies began collecting more extensive personal information for internet advertising and marketing purposes.1 In recent years, however, the volume and value of consumer data collection has increased exponentially. The transfer of consumer data has become a major multibillion-dollar industry of its own: In 2018, U.S. companies spent nearly $20 billion acquiring and analyzing consumer data.2 At the same time, consumer-privacy laws are on the rise at the state level and are under consideration at the federal level.3 Put lightly, the value of data can result in substantial friction with maintaining and complying with important consumer-privacy interests.
Bankruptcy courts routinely deal with the sale of consumer data, often in retail bankruptcies, but to date “big data” issues have rarely, if ever, surfaced. However, this could change with the anticipated surge of corporate bankruptcy resulting from the recent COVID-19 pandemic.4 Going forward, bankruptcy judges and “consumer privacy ombudsmen” (CPOs) should be ever more mindful of the complex consumer-privacy legal landscape and increasingly vocal call for stricter standards related to the collection, use and transfer of consumer information across the nation.
Read the full article
American Bankruptcy Institute Journal by Carl Wedoff and David P. Saunders. Published July 2020.