Evan Schuman's StorefrontBacktalk

California is about to ban booksellers from sharing information about what their customers buy. The Reader Privacy Act, which has already passed the state Senate and is well on its way to becoming law, would prohibit bookstores—including almost any retailer that sells books—from disclosing what a customer reads unless the customer agrees or a judge orders it.

The legislation reaches well beyond bookstores and physical books, covering audio books and E-readers as well as almost any retail chain that includes a books section. (Barnes & Noble? Definitely. Wal-Mart? Certainly. Safeway? Maybe.) The bad news: Retailers covered by the law will be required to create a detailed, publicly available annual report covering how much customer information was disclosed the previous year—whether it was disclosed with customer approval or not.

The primary purpose of the law is to limit law enforcement and other government agencies from fishing through individuals’ preferences in books—and those are broadly defined. Under the proposed law, a book is “content in printed, audio, electronic or other format, including fiction, nonfiction, academic or other works of the type normally published in a volume or volumes,” which does a good job including audio books, e-books and online content.

The legislation also ropes in many retailers that wouldn’t normally qualify as bookstores: Any “commercial entity” that offers “a service that, as its primary purpose, provides the rental, purchase, borrowing, browsing or viewing of books.” (Note that a retailer doesn’t have to be primarily in the business of selling books for this law to apply. The law kicks in as long as some department of the retailer is devoted to selling books.)

In short, if a California retailer sells books, neither the government nor a third party (in a lawsuit, for example) can get access to the books a customer bought unless either the customer gives explicit permission or a judge certifies that the demand meets certain rigorous conditions. That sounds like a law that’s both customer-friendly and retailer-friendly, especially since details about what customers read can be embarrassing—and if those details are revealed, customers can usually figure out who blabbed.

There’s just one major catch: Every year, each retailer selling books in California will have to publish a report detailing everything the retailer had to do in connection with this law—all federal and state warrants, subpoenas, court orders and requests for information where a customer agreed to the disclosure—complete with counts of every time information was requested, contested, refused or released, all of it in excruciating detail.

Now that’s retailer-unfriendly. What’s worse, it also opens a whole world of unintended consequences when it comes to CRM systems. What happens if a bookseller—like, say, Borders—goes bankrupt and the bankruptcy court rules that CRM data is an asset that has to be auctioned off. Will California fine a bankrupt bookseller for disclosing customer information at the order of a federal bankruptcy judge?

Or what happens when a California retailer is sued in another state, and the plaintiff demands information about who bought what books? Or what if an out-of-state e-book seller like Amazon discloses information about books read by California customers? It’s not even completely clear exactly whether and when a retailer can voluntarily share that type of customer information with an outsourcer for some sort of data processing. Will that require an opt-in by the customer—what the law calls “informed, affirmative consent”—just for handling by a partner?

It sounds like a wonderful idea to beef up book buyers’ privacy protection. But between the paperwork and the uncertainty, this sounds like the type of protection most retailers really hope they’ll never need.