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Stupid Bankruptcy Watch: Borders Sale Hinges on Idiocy

9/27/11

By Ken Magill

In another example of how privacy zealots regularly manage to muck things up and cost businesses piles of cash without protecting anyone from anything meaningful, a judge yesterday ruled Borders Group Inc.’s sale of intellectual property to Barnes & Noble can go ahead.

As a result, Barnes & Noble can take possession of Borders’ 48-million-customer database.

No, it’s not stupid that the judge ruled they could move forward with the deal. It’s the conditions under which he ruled they could make the transaction that are stupid.

The two companies have agreed to send Borders’ customers an email giving them 15 days to opt out of the transfer. They have also agreed to split the cost of an ad in USA Today giving customers information on how to opt out.

And here is where we get stupid: Some sort of an email notification would have probably gone out with no interference by the court. As a result, we have an unneeded ruling.

The mechanisms are already in place to punish Barnes & Noble severely if it does the wrong thing.

If the company starts indiscriminately spamming its newly acquired database’s email addresses, people will report Barnes & Noble as a spammer and the company will risk even messages to its current customers getting blocked.

Negative business incentives don’t come much more threatening than that.

And as for the ad, no one who reads books reads America’s attention-deficit newspaper, USA Today. Every penny these two companies are forced to spend on that ad is a penny wasted.

In any case, the stupid was evident in this case right from the beginning.

Previous to Glenn’s ruling, the busybodies over at the Federal Trade Commission once again demonstrated they don’t have near enough to do by getting involved. At the request of a “consumer privacy ombudsman” appointed by the court overseeing the bankruptcy, the FTC sent a letter to the ombudsman urging the protection of Borders’ customers’ privacy from who the hell knows what.

“Borders sold books, DVDs, CDs, and other merchandise through brick-and-mortar stores, kiosks, and online,” the letter said. “In the course of conducting its business, Borders collected substantial amounts of personal information, including purchase history and email addresses, from over 20 million customers.” The FTC advocated restrictions on the sale, citing two Borders’ privacy policies indicating the company would not share the names except under limited circumstances.

The FTC’s action in this case isn’t an argument for consumer protection. It’s an argument against having privacy policies, or at the very least, crafting them as broadly as possible.

Privacy policies protect no one from anything. The only time they come into play is when they’re being used to bite some business in the ass.

In a sane world, Borders’ customer file with purchase histories would simply be an asset that Borders could sell to Barnes & Noble and get as much back for creditors as possible. The sale would allow Barnes & Noble jumpstart some growth by making intelligent offers to Borders’ former customers in an effort to convert them.

Oh, and that growth would probably result in some hiring. But we can’t have that, can we?

Nope. In FTC privacy bizarro-world, a possible goldmine asset that took years to build is a threat that must be demolished at the stroke of a pen.

Judge Glenn’s ruling wasn’t as bad as it could have been.

But it is only because privacy zealots have been able to infect every aspect of online marketing with their brain-eating lunacy that he felt compelled to restrict the transaction at all.

With every privacy-advocate success, the free market dies a little more. Folks, we can’t afford these lunatics.

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