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N.Y. AG Takes on Privacy Fight With Gratis

New York's Attorney General is turning up the heat on data brokers over their privacy policies.

Eliot Spitzer's office said today that it filed suit against Web site operator Gratis Internet, charging that Gratis sold personal information that was obtained from millions of consumers despite a strict promise of confidentiality.

"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 said in a statement.

Spitzer's office began an investigation of companies involved in data mining or the compilation and sale of marketing lists early last year.

The focus of the investigation quickly turned to Gratis, a Washington, D.C.-based company that owns and operates several Web sites that provide consumers with ways to receive free products like iPods, games and designer handbags, generally through free trials of yet other products and services offered by companies like Blockbuster, Citibank and BMG.

The sites run by Gratis include or have included: FreeiPods.com; FreeCDs.com; FreeDVDs.com and FreeVideoGames.com.

From 2000 through 2004, Gratis made numerous explicit promises to the users of its Web sites about protecting personal information. According to Spitzer's office, among the promises the company made were:

"We will never give out, sell or lend your name or information to anyone"

"We will never lend, sell or give out for any reason your e-mail address or personal information"

"We at [Gratis web site] respect your privacy and do not sell, rent or loan any personally identifiable information regarding our customers to any third party"

"Please note that we do not provide your E-mail address to our business partners."

But, according to the attorney general, an 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 e-mail marketers.

The marketers then sent hundreds of millions of e-mail solicitations to those users on behalf of their own customers. In each of these deals, Gratis wrongfully shared between one and seven million confidential user records, Spitzer charged.

Gratis' company Web site features complimentary write-ups from publications such as Wired and the Boston Globe.

A spokesman for the company was not immediately available for comment.

Consumer privacy advocates praised the attorney general's actions.

The Electronic Privacy Information Center, a privacy advocacy group based in Washington D.C., put out a statement saying it supports the efforts.

"Without strong enforcement, privacy policies are meaningless. We support the efforts of the New York Attorney General to safeguard consumer privacy" Marc Rotenberg, the executive director of

The suit, filed in New York State Supreme Court, seeks penalties and injunctive relief, against Gratis and its principals, under New York's consumer fraud statutes.

The lawsuit follows the Spitzer's settlement, earlier this month, with e-mail marketer Datran Media, to whom Gratis had sold its user records.

The Gratis suit was handled by Assistant Attorney General Karen Geduldig of the Attorney General's Internet Bureau, under the direction of Ken Dreifach, Chief of the Internet Bureau, and with the assistance of fraud analyst Sibu Thomas.