Andrea M. Matwyshyn, Repossessing the Disembodied Self: Rolling Privacy and Secured Transactions

Andrea M. Matwyshyn, Repossessing the Disembodied Self:  Rolling Privacy and Secured Transactions

Comment by: Diane Zimmerman

PLSC 2012

Workshop draft abstract:

Consumer privacy in commercial contexts is primarily governed by rolling form contracts that are usually amendable in the sole discretion of the drafter.   As these contracts have become longer and less readable over time and as consumers have become progressively more comfortable with the informational disembodiment of the self, concerns over fairness in privacy contracting grow.   These concerns loom particularly large when a company enters bankruptcy:  privacy contracts/terms of use may include a provision that allows for the disposition of consumer data in bankruptcy in a manner unfettered by privacy promises.  Alternatively, in the absence of FTC intervention, a bankruptcy court may attempt to facilitate sale of database assets by simply setting aside the privacy contracts with consumers.   Engaging with the contract literature, secured transactions literature and bankruptcy literature, this article argues that as progressively more sensitive consumer information becomes controlled by private companies, a fundamental tension arises:  databases frequently become the primary assets of companies, but yet their collateralization, repossession and disposition processes are uncertain as a matter of law.   Equally uncertain is the extent of companies’ continuing privacy obligations to consumers in bankruptcy.   This dynamic pushes borrowers, lenders, courts, consumers and the FTC into an unsustainable relationship in the innovation lifecycle.    The article concludes by proposing an amendment to the current law of secured transactions in databases that balances the privacy interests of consumers with enabling information entrepreneurship and capital formation.