Should Retailers Fight For Their Customers’ Privacy? Only If You Like Having Customers

Written by Mark Rasch
May 30th, 2012

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

When Ford Motor Company, wanted to investigate the sale of counterfeit parts on eBay (and payments for those parts on its affiliate, PayPal), it subpoenaed seller records from these companies. What it did next, although perfectly legal and even reasonable, may have troubling implications for commerce and privacy. Because the Dearborn, Mich., automaker did not want the sellers to know they were under investigation, Ford got a court order not only requiring eBay and PayPal to pony up the records but also removing the requirement that eBay and PayPal tell the sellers that Ford wanted their names, addresses, records of sales and bank account information.

Remember those pesky privacy policies that say, “We will never give out your information without your knowledge or consent?” Well, not so much. Especially if someone appointed for life by the President of the United States says we can’t tell you. The court’s secrecy ruling essentially tips the privacy policies of eBay and PayPal on their end and says that anyone can get your records without you knowing about it if that someone has enough well-paid lawyers.

Ford appeared to be concerned that a dozen or so eBay sellers were selling counterfeit Ford parts and filed a John Doe lawsuit in federal court in Detroit against the unnamed sellers. The next step for the carmaker was to find out who these “John Does” really were. So Ford requested that the court permit it to have discovery—before the lawsuit was even served on the unknown defendants—of information about the identities and the activities of the John Does.

Ford requested not only identity information, including names, addresses and contact information, but also transaction information such as bank account information, records of sales and listings. The court essentially said, “OK, fine. But where you have the E-mail addresses of the alleged perpetrators, either eBay or PayPal must notify their customers and let them know both that they are being sued by Ford, that their records are being requested and that they have a right to defend themselves against the lawsuit.”

Ford objected, saying that notifying someone that they are being sued “would serve to ‘tip-off’ or warn the Doe defendants of Ford’s investigation. Under the procedure as written, the Does would have notice that Ford was seeking their identities and thus ample time to destroy evidence, the counterfeit and infringing goods, and flee to avoid service all before Ford would be entitled to receive their true identities.” So the court removed the requirement that eBay and PayPal notify (actually subpoena) their customers.

The case is troubling for several reasons. First, let’s start with the basic idea that if a consumer is being sued, they have a right to know that they are being sued and to defend themselves. Although the allegations of copyright infringement made by Ford are serious, let’s not forget that they are just that—allegations. Not a whiff of evidence has been presented to show that they are true—at least not yet.


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