NEWS RELEASE
Office of Maryland Attorney General J. Joseph Curran, Jr.


May 16, 2001 Media Inquiries: Sean Caine 410-576-6357

CURRAN JOINS TEXAS AND DELAWARE IN FIGHT TO PREVENT eToys FROM SELLING CUSTOMER DATA

Baltimore - Attorney General J. Joseph Curran, Jr. has joined the Attorneys General of Texas and Delaware in seeking to stop an online toy retailer from selling customer information as an asset in a bankruptcy proceeding. At a hearing today in U.S. Bankruptcy Court in Wilmington, Delaware, Curran supported Texas Attorney General John Cornyn's motion that the court appoint a consumer privacy ombudsman who would investigate the circumstances of eToys, Inc.'s proposed sale of customer information.

EToys, a Delaware corporation, sold children's toys, software, books and other children's products through its website, www.eToys.com. It filed for bankruptcy on March 7, 2001. In the course of selling its assets, it has proposed selling its customer list to toymaker, KB Consolidated, Inc.

"We object to eToys selling information about its customers to another company, because that violates the privacy policy it posted on its website, which promised consumers that their personal information would not be sold or shared with third parties," said Curran.

EToys' privacy policy read, in part:

"eToys respects your privacy. We do not sell, rent, loan or transfer any personal information regarding our customers or their kids to any unrelated third parties. Any information you give us about yourself or your kids is held with the utmost care and security and will not be used in ways to which you have not consented."

In response to eToys' proposal to sell its customer list, the Texas Attorney General had filed a motion to preclude the sale of the customer list. In response, eToys proposed that it and KB would send e-mail messages to eToys customers regarding the sale of the personal information and provide an opt-in/opt-out choice. The Attorneys General object to this proposal, as eToys and KB would alone determine what the e-mail messages would say.

"Our concern is that such a message may not clearly state to the consumer what he or she is agreeing to," said Curran.

In addition, the Attorneys General object to the fact that eToys has not stated whether sensitive financial information (such as credit card numbers, Social Security Numbers and/or bank account numbers) would be sold. The Attorneys General believe such sensitive information should not be sold or transferred at all, but should be destroyed by eToys.

In response to objections filed last year by over 40 states and the Federal Trade Commission to a similar bankruptcy proceeding involving another online retailer, Toysmart.com, the U.S. Senate passed an amendment to the Bankruptcy Reform Act of 2001 allowing the Bankruptcy Court to appoint a consumer privacy ombudsman to balance the various interests of the parties.

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