• by Wendy Davis  @wendyndavis, March 14, 2006

E-mail marketing company Datran Media has agreed to pay $1.1 million to close an investigation by New York State Attorney General Eliot Spitzer into what his office called the largest breach of privacy in Internet history.

The investigation found that Datran obtained e-mail addresses and other information about consumers from companies that had promised on their Web sites not to share such information.

With the settlement, Spitzer's office promised to stop investigating the e-mail marketing company. For its part, Datran agreed to pay $750,000 in penalties, $300,000 disgorgement and $50,000 costs, destroy consumer information that was wrongly collected, and appoint a chief privacy officer.

Datran spokesman Mark Naples said in a statement that Datran discontinued the practice in the first half of 2005, before the Attorney General began making inquiries. "We have always been and remain committed to industry best practices," Naples stated. (Naples is a columnist for MediaPost's Online Spin.) Datran also named a chief privacy officer last month.

In the written "assurance of discontinuance," signed by Datran representatives and Spitzer's office, the Attorney General spelled out its findings. The investigation revealed that "on numerous instances between January 2003 and April 2005," Datran obtained personally identifiable information about consumers--including e-mail addresses, names, addresses, and phone numbers--from Web sites that had promised they would not disclose such information.

"In a number of cases, Datran knew prior to acquiring such information that the list provider had made such promises to consumers; yet, Datran used such information, and sent millions of emails to such consumers," stated the assurance of discontinuance in a section marked "Findings of Attorney General."

The document specifically named Gratis Network as a supplier of the consumer records. Datran reportedly received records for 6 million consumers from Gratis, which collected consumer information on sites like freeipods.com and freedvds.com. Gratis--which remains under investigation--promised consumers that it wouldn't share their e-mail addresses or other information.

Beth Givens, director of the consumer advocacy group Privacy Rights Clearinghouse, criticized Datran for having sent e-mails to the Gratis list, saying: "If you're going to be a responsible company you must read the privacy policies of the companies you purchase email addresses from."

While Spitzer's office said that the privacy breach might have been the biggest in Internet history, the total settlement is not the largest Spitzer has obtained in Web-related cases. For instance, Intermix (now owned by News Corp.) agreed last year to pay $7.5 million to settle a charge that it wrongly installed adware on consumers' computers.