[BreachExchange] Showpo sues online retailer over claims customer database was misused

[Inga Goddijn]

http://www.smartcompany.com.au/business-advice/legal/81345-showpo-sues-online-retailer-over-claims-customer-database-was-misused/

Former Smart50 finalist Showpo is suing its former graphic designer and
online clothing store Black Swallow, alleging the designer unlawfully
obtained a customer database and passed it on to her new employer.

According to a report by *Fairfax*
<http://www.smh.com.au/business/retail/showpo-sues-fellow-eretailer-over-data-theft-20170116-gts7eu.html>,
Showpo is suing 24-year-old Melissa Aroutunian and retailer Black Swallow
for reputational damage and loss of sales, claiming that before Aroutunian
finished her employment with Showpo in September 2016, she exported a
database that listed the information of more than 300,000 customers.

The exported data allegedly contained contact details for Showpo’s 270,000
customers, along with information about other contacts, buyers, suppliers,
associates, competition entrants, website users and subscribers. No
financial information or credit card details were included in the database,
according to the report.

Aroutunian allegedly downloaded the client contact list before leaving
Showpo and is claimed to have subsequently provided that information to her
new employers at Black Swallow. Showpo claims Black Swallow then used the
information to market itself as an affiliate of the Showpo brand to
customers in unsolicited communications, according to *Fairfax*.

The case is being heard in the Federal Court and Showpo is reportedly
seeking orders for Black Swallow and its employees to destroy or delete the
contact information, as well as an order for Black Swallow to not use a
stylised “W” in its marketing materials due to its similarity with Showpo’s
logo.

Showpo was founded by Jane Lu
<http://www.smartcompany.com.au/lists/hot-30-under-30/68066-jane-lu/> in
2010. In 2014, the retailer was ranked third in *SmartCompany’s* Smart50
awards, with a three-year growth rate of 306%, and in 2015, the company was
turning over $10 million. According to Fairfax, that figure is now close to
$25 million.

Lu and Showpo were unable to provide comment on the case when contacted by
SmartCompany this morning. However, back in 2014, Lu spoke about the
increasingly
competitive landscape
<http://www.smartcompany.com.au/lists/smartcompany-awards-2014/43762-3-showpo/>
of online fashion retail in Australia.

“The space is getting crowded, it’s so much harder to get off the ground
these days as online fashion is becoming a flooded market, so you need to
really work out what your competitive advantages are and push hard to
maintain market share,” she said.

*SmartCompany* was unable to contact Aroutunian for comment, however, Black
Swallow founder Alexander Baro told *SmartCompany* the case “is great
publicity”.

Black Swallow strongly denies the allegation it used the Showpo database,
and Baro claims he has reached out to Showpo a number of times to resolve
the company’s concerns.

“I’ve tried to contact Jane a number of times sort it out. I’ve wanted to
sort it out,” he says.
*A warning for SMEs*

Alan McDonald, director at law firm McDonald Murholme told *SmartCompany*
that in general terms, businesses should be doing everything possible to
stop the transmission of personal customer data, even though he believes
the courts are protective of property that businesses have legitimately
built up, like databases.

“They really need to make sure that their systems are in place to prevent
it,” he says.

Businesses are also reminded that when it comes to use of customer
information, third parties need to be careful if they come across data that
isn’t theirs. If information crosses a business’s path that relates to
another company’s customers or databases, be aware of the potential
consequences of using it, says McDonald.

“If you do, you can be brought into litigation,” he says.
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.riskbasedsecurity.com/pipermail/breachexchange/attachments/20170117/63b0b5cb/attachment.html>