Bankruptcy

Are Companies in Bankruptcy Throwing Away Your Personal Info?

We’ll get back to the “Back to Basics” series later, but first, a bit of news on the intersection of bankruptcy and consumer privacy rights.

This article from MSNBC.com suggests the answer is “yes” and the privacy implications are alarming, to say the least:

As recently as August, First Magnus Financial Corp. was the subject of a magazine feature hailing it as a “technological powerhouse” ready for the future thanks to its “tech-savvy management team.”

Just two weeks later, First Magnus, one of the nation’s largest mortgage lenders, whose headquarters was one of the biggest employers in Tucson, Ariz., was out of business, another victim of the disintegration of the U.S. mortgage industry.

Among the revelations about Magnus was that it wasn’t quite as technologically advanced as had been billed. Most of its borrowers’ records were still on paper, as Floridians learned when thousands of loan documents were discovered in boxes in an unlocked trash Dumpster in Fort Lauderdale.

Read the rest of the article here. It correctly points out the shortcomings of the federal law applicable to such conduct (FACTA, or the Fair and Accurate Credit Transactions Act — you can read more about FACTA here from the Privacy Rights Clearinghouse) as well as the somewhat disinterested response from the Federal Trade Commission (FTC, charged with enforcement and administration of many consumer laws).

© 2008 SC Bankruptcy & Consumer Law Blog.