"Unless checked now, companies that collect and sell
information on consumers will continue to find ways to erode the
basic standards that protect privacy in the internet age," Spitzer
explained.
Spitzer’s office began an investigation of companies involved in
"data mining" or the compilation and sale of marketing lists early
last year. It says that the focus of the investigation quickly
turned to Gratis, a Washington, DC-based company that owns and
operates several websites providing consumers with ways to receive
free products, generally through free trials of yet other
products.
These sites include or have included: FreeiPods.com;
FreeCDs.com; FreeDVDs.com and FreeVideoGames.com.
According to Spitzer, between February 2000 and June 2004 Gratis
assured the users of its websites that it would protect their
personal information, promising "we will never give out, sell or
lend your name or information to anyone.”
However, the Attorney General’s investigation confirmed that
Gratis’s owners, Peter Martin and Robert Jewell, repeatedly
violated these promises during 2004 and 2005 by selling access to
lists of millions of Gratis’s customers to three independent email
marketers.
The marketers then sent hundreds of millions of email
solicitations to those users, on behalf of their own customers. The
suit alleges that in each of these deals, Gratis wrongfully shared
between one and seven million confidential user records.
The suit also alleges that, during the course of its
investigation, Gratis repeatedly, but falsely, denied that such
data sharing had even occurred. It cites specific data sharing
contracts, as well as testimony and other evidence provided by
internet marketers that did business with Gratis.
The suit, filed yesterday in New York State Supreme Court, seeks
penalties and injunctive relief against Gratis and its principals,
under New York’s consumer fraud statutes.
The suit follows the Attorney General’s settlement, earlier this
month, with email marketer Datran Media, to whom Gratis had sold
its user records. Datran Media agreed to pay $1.1 million to settle
that investigation.
Gratis has made no comment on the suit as yet.
