A hedge fund bought RadioShack's customer-base for $2.6 billion -- but the FTC doesn't think it should be able to use it

The exterior of a RadioShack store is seen in New York February 5, 2015. REUTERS/Brendan McDermid Thomson ReutersThe exterior of a RadioShack store is seen in New York

The U.S. Federal Trade Commission on Monday urged a bankruptcy court to protect information that RadioShack collected from tens of millions of customers before the retailer filed for Chapter 11.

The FTC said its consumer protection director, Jessica Rich, has recommended that General Wireless, which bought the information, be bound by the terms in place when consumers provided their information. Rich also recommended to the consumer privacy ombudsman in the case that the consumer information be sold as part of a bundle of assets and to a buyer in the same line of business.

RadioShack filed for bankruptcy this year and put up for auction its lists of customer names, email addresses and purchase histories. The lists were auctioned along with other intellectual property as a way to raise money to help repay RadioShack’s debts.

The auction was won by General Wireless, an affiliate of the Standard General hedge fund, which bid $US26.2 million. The investment fund earlier in the bankruptcy acquired 1,743 RadioShack stores, most of which it plans to operate in conjunction with Sprint Corp, a wireless phone company.

Rich noted in her letter that RadioShack promised consumers it would not sell their information. The letter also said the commission had intervened in the bankruptcy of online retailer Toysmart after it sought to sell similar information, counter to pre-bankruptcy promises.

Attorneys general from three dozen U.S. states had raised objections to the RadioShack sale, in part because they said it was unclear what consumer information was being sold and how it would be used.

General Wireless said in a statement that it “has been working with the state attorneys general to ensure that the customer data is protected, and has committed to maintain RadioShack’s strict privacy policies.”

On Wednesday, RadioShack’s legal team will ask Judge Brendan Shannon in Wilmington, Delaware to approve the sale of the intellectual property.

Among the RadioShack copyrights being sold was the phrase “The latest and greatest in privacy and clarity,” according to court records.

Greg Gordon, an attorney for RadioShack, did not immediately respond to requests for comment.

The case is In re RadioShack Corp, No. 15-10197, in U.S. Bankruptcy Court, District of Delaware.

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This article originally appeared at Reuters. Copyright 2015. Follow Reuters on Twitter.

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