Consumer data increasingly lucrative asset in company insolvencies

As Toys “R” Us Canada prepares to sell its branding to a U.S. firm, consumers may be learning that their personal data is included in the sale. The purchaser, an affiliate of Ad Populum, will gain access to customers' names, contact and account information, transaction histories, and communications with the Canadian retailer. Ad Populum has not disclosed how it intends to use the data and has declined comment on The Canadian Press' request for clarification.

This issue of data being transferred in company insolvencies is becoming more common as businesses recognize the immense value of customer information. Dina Kovacevic, editor of Insolvency Insider, notes that data is becoming "the currency" of the business world, and its significance will only increase. While data has long been considered an important asset, its importance has grown exponentially as companies seek to avoid starting from scratch when acquiring failing businesses.

Consumers often only learn about the sale of their data when they receive a letter notifying them of the transfer and giving them the option to request its deletion. However, privacy concerns are not as prevalent in Canada as they are in the United States, where consumer groups and attorneys general have intervened in cases involving the sale of data from insolvent companies.

Two recent deals have brought this issue to the forefront. Google has offered US$10 million for Spirit Airlines' data, which includes 100 million emails, 500 million Microsoft Teams messages, and other employee records. The tech giant aims to use the data to train AI systems, raising concerns among unions and some policymakers. Meanwhile, 23andMe, a U.S. firm that offers ancestry insights based on genetic data, had its data sale blocked by 27 states and the District of Columbia due to concerns over the sensitivity of genetic information.

While the U.S. court ultimately approved the sale, it serves as a reminder of the risks associated with the sale of personal data. Karbaliotis emphasizes that before sharing information, individuals should consider the potential consequences, as the data could be used in ways that may not align with their expectations.