Virtumundo Sues E-Mail List Providers, Accuses Misrepresentation of Files

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Online direct marketer Virtumundo Inc. said yesterday it filed a lawsuit against e-mail marketer Mindset Interactive Inc. and loyalty marketer Inurv Inc., alleging the two companies "misrepresented the permission-based nature" of e-mail names sold to Virtumundo.

In its lawsuit, Virtumundo alleges that a "significant number" of consumers did not agree to receive ads from Mindset and Inurv and had not given the two companies permission to sell their data. The company did not know exactly how many names were involved. Virtumundo's database has about 15 million active names.

Virtumundo said Mindset and Inurv "represented and warranted" that all consumer information in the data was collected on an opt-in basis and could be used by third parties for marketing purposes.

Mindset Interactive, Irvine, CA, is a software development company focused on creating online and offline marketing applications. The company also engages in direct marketing through the use of data from its database.

"Mindset is not aware of any lawsuit filed by Virtumundo," said Paul Knopick, a company spokesman. He did not comment further.

Inurv, Glendale, CA, provides promotion and loyalty marketing programs through its Web site. No one from Inurv could be reached for comment.

There is no connection between Mindset and Inurv.

Scott Lynn, president/CEO of Virtumundo, alleged that the data obtained from Mindset and Inurv was gathered using fraudulently means.

"This data obtained from Mindset Interactive and Inurv was derived using unscrupulous methods, including 'dictionary spam,' a tactic in which common names are coupled with domain names to generate false e-mail addresses," he said. "It's unfortunate that many companies are capitalizing on the sale of fraudulent data."

Lynn also said that some of the names appeared to be acquired through e-mail harvesting.

He said the names in question were removed from Virtumundo's database immediately after the company learned of the problem.

Toby Teeter, a privacy attorney for Virtumundo, said this was the first time the company had purchased a list from Mindset. Virtumundo bought the list in late December, he said, and shortly thereafter began receiving many complaints, particularly from members of the anti-spam community.

When Virtumundo buys a new list, he said, it routinely sends an e-mail asking whether the recipients indeed had opted in for third-party marketing. In this case, he said, many recipients said they had not.

"We have evidence suggesting their databases were not permission-based," Teeter said. "We literally received a wave of complaints."

Complaints received after using the Mindset data rose more than 10 times its usual level, he said.

"We've experienced damage to the reputation of our company," Teeter said. "Obviously, this hurt us."

Virtumundo is moving more heavily into permission-based marketing, he said, and this does not reflect well on the company's reputation.

"We're identifying bad players in the market," Teeter said. "If you have bad data, don't come our way."

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