"This a major step forward for the privacy rights of Internet users everywhere, said eBay Senior Director of Communications Kevin Pursglove.

The decision, which was announced Thursday, additionally prohibits ReverseAuction.com from using software robots or "bots" to harvest eBay e-mail addresses and sending unsolicited e-mail to eBay users.

The incident began last October when ReverseAuction harvested eBay e-mail addresses and perpetrated a widespread spamming incident that angered thousands of members of the eBay community.

eBay filed the lawsuit against ReverseAuction.com, Inc. in January, accusing ReverseAuction of mechanically harvesting the e-mail addresses, user IDs and feedback ratings of eBay users, and then sending unsolicited e-mails containing false and misleading information about the status of their accounts.

Recipients were led to believe that their eBay user IDs would soon expire, when in fact their accounts were not jeopardy.

Jay Monahan, eBay's associate general counsel, intellectual property, noted that ReverseAuction demonstrated a blatant disregard for the privacy of eBay users.

"This settlement sends a clear message that eBay will not tolerate spamming, and that we will take the necessary steps to protect the privacy of our community," he said.

eBay's lawsuit followed a Federal Trade Commission action filed the same day against ReverseAuction stemming from the same misconduct.

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Monahan said that a portion of the settlement will be used to fund new initiatives that will protect user privacy.