The creditors of a US magazine for gay teenagers and its accompanying website have been warned not to sell off any of their young subscribers’ personal information after going bankrupt.
XY magazine and XY.com catered to gay men aged as young as 13 with advice and features on politics, culture, education and families but their owners filed for bankruptcy earlier this year.
The firm has just one valuable asset left – its database of one million users, complete with names, street address, bank details and email addresses.
The majority of the young men on the database will be gay, with many likely to be keeping their sexual orientation from their families.
The company’s creditors, Peter Larson, listed as majority owner of magazine publisher XY Residuary Corp, and Martin Shmagin, president of financial consulting firm Innovative Financial Solutions, have apparently asserted ownership of the customer information.
The Federal Trade Commission (FTC) has warned them that any transfer of the database will violate the privacy standards in place before the company collapsed.
According to the FTC’s letter, the company had made a number of promises to readers that it would never sell their personal data, and even posted the magazine to subscribers in plain black packaging to avoid their parents seeing it.
The letter warned that using the data to restart the magazine and website could also violate federal law.
“Therefore, any sale or transfer of the data to a new company, new owner, or other third party would directly contravene the privacy representations and could constitute a deceptive practice by the original company or its principals. Such practice also could be unfair.”
It concluded by asking for the data to be destroyed as soon as possible.
The founder of XY and XY.com, Peter Ian Cummings, filed for bankruptcy in February 2010. He listed the business’s only asset as the “customer list, personal data and editorial and back issues of XY Magazine and XY.com”.
Shoshanna Schiff, a partner with the Trenk law firm which is representing XY’s creditors, told the US website Cnet.com: “Any property listed on the debtor’s bankruptcy petition is property of the bankruptcy estate and my client intends to administer those assets for the benefit of creditors.”