Peer-to-Peer: Can I use the customer list of a bankrupt client?

Written by ProfitGuide Staff


“I have been consulting for a company for some time now, and it has supplied me with a copy of its customer list. Now it looks like the company will go bankrupt. If this happens, is it legal and/or ethical for me to use its data?”

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Reader responses

Michael Gauthier, Freedom Computing:

As a consultant, you have a legal obligation (probably in writing) to respect the confidentiality of data released to you, including (quite specifically, I am sure) customer lists. Even in bankruptcy, the customer list is an asset of the company, and you certainly have no right to resell or initiate any new contact with the customer list.

Assuming the list was given to you for a specific project, then follow-up contact may be appropriate, and even necessary, in order to indicate that the project has been cancelled. But beyond that, I suspect any further communications would not be ethical or legal without specific permission from the company.

Dan Cadieux, ACCOlution:

There are many areas to consider in determing the legitimacy of a list, such as: do you have legal ownership of (right to use) the list?; and is the list privacy compliant?

The recent privacy legislation in Canada requires that “personal information” (such as a person’s name, address, phone number, etc.) only be used for the purpose it was collected. That means you cannot use personal information for your purpose if that was not the original reason for which it was collected.

Although most business information is not classified as “personal information,” a recent ruling by the Privacy Commissioner deemed business e-mail addresses “personal information.” Further information can be found at www.privacyforbusiness.ic.gc.ca. There are also many sources of lists available for purchase on the Internet that are generally privacy compliant. Sources of lists can be found at the Canadian Marketing Association.

David Rabby, PFI Research Inc.:

As part of our day-to-day operations at my Canadian market research company, we are often given client lists from very prominent major corporations, banks and such. At times the research buyers (clients) supply more information than is necessary for the research. This places a burden on us as suppliers as to how to treat this information. Our policy is to delete all except the most necessary information, i.e., name, address, phone number, basic demographic data, etc. Additionally we either return or destroy lists after the research project is finished.

This is important for many reasons. Our industry is self-governed by the Marketing Research and Intelligence Association (MRIA), whose members adhere to guidelines governing privacy issues and confidentiality, among others. If there is an industry association for the field you are in, I would urge you to ask them. Please also peruse the MRIA website because many of those types of questions are asked.

It is not only unethical but illegal to use any portion of the lists you were given for anything other than the explicit purpose. Please Google PIPEDA (short for the Personal Information Protection and Electronic Documents Act, the federal privacy law) for more information on the treatment of customer lists when a company dissolves. Often customer databases are sold as part of the assets of a company. However, unless every customer specifically agreed to having their name passed on if the company is sold or goes bankrupt, legally they cannot be.

For his answer, David Rabby will receive a copy of Everything I Needed to Know about Business I Learned from a Canadian, by Leonard Brody and David Raffa.

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Originally appeared on PROFITguide.com