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Borders CRM Data Still In Play

July 21st, 2011

To a customer signing up for a loyalty program, that probably sounds pretty airtight—customer data is going nowhere without each customer’s express permission. Maybe Borders management actually believed that, too—after all, they launched the program in 2008, at a time when you had to believe a lot of impossible things to be in the big-box bookstore business.

But apparently the Borders lawyers didn’t mind contradicting faith with reality. Buried deep in the 3,500-word privacy policy is a none-too-surprising disclaimer:

Disclosures in connection with acquisitions or divestitures. Circumstances may arise where for strategic or other business reasons Borders decides to sell, buy, merge or otherwise reorganize its own or other businesses. Such a transaction may involve the disclosure of personal and other information to prospective or actual purchasers, or receiving it from sellers. It is Borders’ practice to seek appropriate protection for information in these types of transactions. In the event that Borders or all of its assets are acquired in such a transaction, customer information would be one of the transferred assets.”

In other words, the CRM data belongs to customers—until Borders is acquired, at which point it doesn’t. And that may be a problem, depending on how the bankruptcy court disposes of the information on what Borders says are 43 million loyalty-program customers. If that data is bundled with the brand and relaunched as an online bookstore, or swallowed and digested by another bookselling competitor—say, Amazon (Borders’ former E-tail partner), Barnes & Noble (its biggest brick-and-mortar competitor) or some smaller bookseller, there’s not likely to be much more than grumbling from customers or consumer advocates.

But if the CRM data is sold off separately—or to a buyer who simply dumps the Borders brand and uses or peddles the Borders customer list—that could jerk the chains of politicians who are increasingly twitchy about customer privacy and especially information on book-buying behavior.

It’s the same sticking point that gave Amazon a courtroom win last year, in which the North Carolina Department of Revenue was blocked from getting data on what North Carolina residents bought from Amazon, so the state’s tax agency could try to collect sales tax on the purchases. And California is currently in the late stages of passing legislation to slap tight controls on getting access to the book-buying habits of customers without their explicit permission.


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