• by Wendy Davis  @wendyndavis, October 19, 2012

Analytics company KISSmetrics has agreed to settle a class-action lawsuit by promising to avoid using ETags or other "supercookies" to track people online without first notifying them and giving them a choice.

The company also will pay $2,500 each to the consumers who sued -- John Kim and Dan Schutzman -- and around $500,000 to the attorneys who brought the case, according to court papers filed on Thursday.

If approved by U.S. Magistrate Judge Laurel Beeler in San Francisco, the settlement would resolve a dispute alleging that KISSmetrics violated wiretap laws by using ETags (and other supercookies) for tracking. ETag technology is controversial because it can be used to track people across the Web, even when they try to protect their privacy by deleting traditional HTTP cookies.

Kim and Schutzman filed suit last year, shortly after researchers at UC Berkeley published a report detailing how KISSmetrics allegedly used ETags to store information in Web users' browser caches. When those users deleted their cookies, they could be recreated with information from the ETags.

Within days of the report's publication, KISSmetrics said it had stopped using ETags. Until the practice came to light last year, the only way for users to avoid KISSmetrics' tracking was either by clearing their browser caches between each Web site visit or by installing the AdBlock Plus extension.

The proposed settlement calls for an injunction banning KISSmetrics from using ETags (or other hard-to-delete cookies) to "repopulate HTTP cookies or as an alternative method to HTTP cookies for acquiring or storing information about a user’s Web browsing activity and history, without reasonable notice and choice." KISSmetrics isn't admitting liability as part of the settlement agreement.

A separate lawsuit against both KISSmetrics and the video service Hulu (which allegedly worked with KISSmetrics) is still pending. In that case, Hulu is accused of violating a federal video privacy law that prohibits movie providers from sharing information about the films people watch without their consent.