E-mail Marketer Slapped for Privacy Violations

E-mail marketer Datran Media has agreed to a $1.1 million settlement with the New York Attorney General’s office stemming from charges that Datran bought email lists that it knew to be in breach of the originating sites’ privacy policies.

The settlement also includes provisions for Datran to destroy the data in question, and tighten up its policies in dealing with personally identifiable information (PII). Datran will be required under the settlement to appoint a chief privacy officer within 10 days, and independently confirm that all lists it buys going forward are in compliance with the seller’s privacy policies.

“With this case, we hope to set a new standard for Internet marketers and consumer research companies. Personal information secured through a promise of confidentiality must always remain confidential,” Eliot Spitzer, New York’s attorney general, said in a statement.

The largest list came from Gratis Internet, which operates several sites, including freeipods.com and freedvds.com. The New York AG is still investigating Gratis, along with other list providers. Gratis could not be reached for comment.

According to Spitzer, Datran cooperated fully with his office’s investigation, and began improving its list purchasing and due diligence practices in April 2005, prior to the commencement of the investigation. “We have always been and remain committed to industry best practices. Therefore, we are pleased to resolve this matter with the attorney general and are gratified that his office worked collegially with us,” said Datran spokesperson Mark Naples.

Gratis collects personal information in exchange for the chance to win iPods, DVDs, computer equipment or other prizes by signing up for offers from advertiser partners and referring friends to do the same. According to Spitzer’s investigation, the company assured users on several of its sites that it would not “lend, sell or give out for any reason” users’ addresses or the information provided by users to outside companies.

Spitzer’s office alleges that Datran knew of the policy before purchasing lists containing 7 million email addresses from Gratis, but that Datran bought the lists and used them to send millions of unsolicited emails to consumers. Datran contends that it discontinued the practice in the first half of 2005, before receiving an inquiry from the attorney general.

“We take this matter very seriously. Therefore, we believe it was important to confront it head-on and resolve it quickly,” Naples said. “We are pleased that this agreement does not put any restrictions on any of Datran’s current practices and will not in any way affect our ability to deliver great results for our clients.”

Datran will pay $750,000 in penalties, $300,000 to repay any gains made from using the information in question, and $50,000 to repay the AG’s office for costs of the investigation.

Spitzer said he hoped the case would help establish more controls on data compiled and sold by consumer research companies and list builders.

“Companies must adhere to known privacy policies and promises. Failing to do so constitutes a clear consumer fraud,” he said.

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