Toysmart

» see toysmart.com as it lived, on the wayback machine

~ the eulogy ~

toysmart was a us-only online toy store, the kind of dot-com that burned through cash during the 1999 holiday season and was gone by mid-2000. i never visited it. nobody i knew in turkey did. its actual cultural footprint comes from how it died and the law that came out of the funeral.

the company started in 1998 selling educational toys online from waltham, massachusetts. disney's buena vista internet group bought 60% of it in august 1999. the 1999 christmas season did not deliver. disney withdrew its support in march 2000. by may 22 toysmart had laid off all staff and announced it would sell off everything to pay creditors. the everything in this case included a customer database with names and addresses, plus family profiles that included the birthdates of children.

the ftc sued on july 10 2000. the legal problem was specific. toysmart had displayed a truste privacy seal and posted a privacy policy promising never to share customer information with third parties. selling the database was a breach of that promise. the case became the first federal action over a dot-com bankruptcy's customer-data sale, and it set the precedent that privacy policies are binding contracts that survive a company's death.

~ the dossier ~

~ how it actually ended ~

the ftc settlement was a mess. the agency initially proposed allowing toysmart to sell the database, but only to a buyer in a family-related business that would inherit the privacy policy unchanged. a bankruptcy judge rejected the proposal as too narrow. disney eventually offered $50,000 to buy and destroy the database itself, which the court accepted in january 2001. the dispute ran for months in the trade press because nobody had ever litigated what a defunct dot-com owed its old customers.

~ what got buried with it ~

toysmart's name is now mostly a footnote in privacy law textbooks. the case is cited every time a startup dies with user data on its servers and somebody asks what the lawful next step is. the answer that came out of toysmart was "honor what you promised, even after you are dead." most subsequent acquirers have ignored that and gambled on the ftc not following up, but the case is still on the books and still gets cited in modern bankruptcy data-sale fights.

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