New York Attorney General Eliot Spitzer announced a $1.1 million settlement yesterday involving allegations of a privacy breach with e-mail and database marketing services provider Datran Media LLC, New York.
The Internet bureau of the attorney general's office investigated Datran's use of specific e-mail lists when sending marketing messages on behalf of its clients, according to the Assurance of Discontinuance document issued in the settlement.
The settlement said Datran obtained and knowingly used personally identifiable information from list providers who had promised consumers they wouldn't sell, rent or share such information with third parties.
One instance that was alleged consisted of millions of e-mail records from Gratis Network LLC, which operates Web sites on which consumers sign up to try to earn free consumer goods such as iPods.
“We have always been and remain committed to industry best practices,” Datran spokesman Mark Naples said in a statement. “We take this matter very seriously. Therefore, we believe it was important to confront it head-on and resolve it quickly. Importantly, while Datran discontinued the practice in the first half of 2005 — and began to do so before any inquiry from the attorney general — many marketing and list owner companies continue to engage in this practice.”
Naples also said the settlement places no restrictions on any of Datran's current practices.
Datran admitted to no wrongdoing but agreed to pay $1.1 million, including $750,000 in penalties, $300,000 as disgorgement and $50,000 as investigatory costs. The company also agreed to hire or designate a chief privacy officer, destroy the data from Gratis and other list sellers and improve its due diligence before buying lists.
Datran is a member of the Direct Marketing Association, the Email Sender and Provider Coalition and the International Association of Privacy Professionals.
Though mentioned in the settlement, Gratis is not part of the agreement.