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March 13, 2006
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The Internet companies had said on their Web sites that they would not give or sell information provided.
The AG's investigation revealed that Datran obtained the largest cache of consumer information from Gratis Internet, a company that has a published policy of not sharing, selling, giving, or lending customer information "for any reason."
Spitzer accused Datran of knowing of the companies' pledges but nevertheless spamming those consumers with unsolicited e-mails advertising discount drugs, diet pills and other products.
"Personal information equals marketing dollars," Spitzer said. "You learn more about consumers who you want to target in a hundred different ways, and there's nothing wrong with that if you get the information properly."
The settlement is scheduled to be announced today, Assistant Attorney General Karen Geduldig told Reuters, noting that her office began investigating Datran in the summer of 2005 after an Internet security assurance company raised a concern.
She declined to provide further details of Datran's alleged actions.
Datran, which mines customer data and demographics on behalf of its clients, changed its privacy policy last Friday to reflect the conditions of its agreement.
"We may sell the personal information that you supply to us, and we may work with other businesses to bring select retail opportunities to our users," Datran's privacy policy now says. "Additionally, Datran Media purchases and manages email lists generated by affiliate Web sites and organizations."
Datran admits no wrongdoing under the terms of the settlement, said Datran spokesman Mark Naples.
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.
The settlement also includes provisions for Datran to destroy the data in question, and tighten up its policies in dealing with personally identifiable information. 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.
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.
Naples said Datran never received financial data and never sent e-mails regarding discount drugs. He said that although 6 million e-mails were involved, that didn't represent 6 million people.
Datran promises its customers "ironclad" relationships with ISPs guaranteeing that their customers' mail will be successfully delivered.
Datran also assists its clients with press contacts and placement of favorable stories in the media.
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