Bankrupt Gay Site Agrees to Destroy Customer Data
But situation raises a new privacy worry
By John Johnson,  Newser Staff
Posted Aug 13, 2010 2:17 PM CDT
What happens to your private info when a website goes bankrupt? It's unclear.   (Shutterstock)

(Newser) – Bankruptcy laws still haven't caught up with our brave new world, raising a new wrinkle in online privacy concerns, warns the Electronic Frontier Foundation. Let's say you provide personal information to a website, even after carefully reviewing the site's rules. What happens if the site goes bankrupt? The rules are so hazy on the subject that all that private data could end up in the hands of the highest bidder.

Such a scenario nearly played out for real when XY, a magazine and dating website for gay youths, went bankrupt. The parties involved eventually agreed to destroy the personal info it had on its 1 million customers, but that outcome wasn't a certainty—despite assurances the company had made when solvent. Time to close the loophole. "Congress should update the Bankruptcy Code to better protect consumers whose personal information is treated as an asset in a bankruptcy proceeding," writes the EFF.