The Gratis-Datran-Eliot Spitzer fiasco just gets curiouser and curiouser. And quite frankly, we are perplexed.
Some e-mails obtained exclusively by Magilla Marketing look pretty damning against Gratis and Datran. However, they could also represent a serious waste of taxpayers’ dollars by Spitzer’s office.
The day after last week’s issue of Magilla Marketing went out, a call came in from Ken Dreifach, chief of New York Attorney General Eliot Spitzer’s Internet bureau.
Dreifach wanted to straighten us out on a couple things. He was very polite. But then guys who are used to holding most of the cards usually are.
You can bet Magilla Marketing was not multitasking during the call with Spitzer’s top Internet dog. We were all ears.
For background: Spitzer’s office on March 12 announced that lead-generation firm Datran had settled for $1.1 million to end an investigation into some e-mail marketing arrangements it had made with, among other companies, Gratis Internet. According to Spitzer’s office, Datran was e-mailing consumers on Gratis’ list contrary to promises made on some of Gratis’ Web sites.
Magilla Marketing called the settlement a shakedown and said that as a result of the settlement, marketers would be on the hook for changes in the privacy policies of every company they do business with.
However, Dreifach said in his phone call, not only was Datran aware of Gratis’ privacy-policy changes, Datran sales executives recommended the changes.
Moreover, Dreifach said, privacy-policy switcharoo was “standard operating procedure” for Datran.
“Their policy was [that] before they purchased a list, they would go to the seller’s Web site or sites on which the information was collected—often it was more than one site—and they would look at the promises made, and in particular the privacy policy,” said Dreifach. “If they saw anything that made it impermissible for that company to share the lists, they told them to change the policy and then simultaneously went ahead with the sale. In other words, they made the assumption … that if you change a privacy policy on March 1st, you are now allowed to apply the new privacy policy to the information that you collected on January 1st.”
Dreifach said he’s got no problem with any data Datran received that was collected after Gratis’ privacy policy was changed.
Datran has gone silent—companies dealing with Spitzer usually do—so it is impossible to get its side of this story.
However, we don’t know, for example, if notices were mailed to consumers telling them Gratis’ privacy policy was changed. Probably not, but we don’t know.
When asked for proof that Datran was recommending changes in business partners’ privacy policies and mailing to names in violation of the promises under which the addresses were collected, Dreifach’s office sent copies of two e-mail strings.
Though they by no means prove “standard operating procedure,” at first glance, they’re troubling.
For example, a June 9, 2004 e-mail that looks to be from Datran’s director of sales, Susan Weiner, to Gratis Internet co-founder Peter Martin says:
“The changes you made are great. We just need you to remove one EXISTING line you have in all your privacy policies (for obvious reasons):
“‘Please note that we do not provide your E-mail address to our business partners.’
“Please let me know when that is done so I can submit to my legal department for sign off.”
In what looks to be a June 10 e-mail from Martin to Weiner, Martin writes: “I noticed another line in our PP: “We at FreeCDs.com respect your privacy and do not sell any personally identifiable information regarding our customers to any third party. Is this ok or would you like to have this removed as well? Since we are not technically ‘selling it, I thought it might be ok.”
Later on June 10, 2004 an e-mail that looks to be from Weiner to Martin says “Looks good Peter! 7.3+ mm records.”
Copies of the e-mails can be viewed here: datranemails.pdf
As near as Magilla Marketing can tell, the actions indicated by the e-mails above are not illegal. Moreover, that Spitzer’s office settled for the relatively small sum of $1.1 million indicates the attorney general’s Internet people didn’t think anything too terrible was going on here.
Meanwhile, in a lawsuit filed last week against Gratis related to the issues surrounding Datran’s settlement, Spitzer’s office accused Gratis of selling more than 7 million people’s e-mail addresses to three e-mail marketers—including Datran—contrary to promises in Gratis’ privacy policies.
Gratis countered by claiming its agreement with Datran and the other companies weren’t list-rental arrangements, but service-bureau arrangements.
“The companies acted on Gratis’ behalf to send promotional e-mail to its own users, and at no time ever engaged in the sale or purchase of data,” Gratis said in a statement. “At all times, Gratis has maintained control and ownership of its user information and never, not once, profited from any sale of data. Gratis at no time in its history ever sold its list to anyone or allowed a company to purchase consumer data, nor has it ever considered doing so, nor will it ever in the future.”
In court papers, Spitzer’s office describes the deals as revenue shares.
Also, privacy auditor TRUSTe yanked its seal from Gratis in 2005 after TRUSTe claimed Gratis violated its privacy program requirements.
One point that seems to be lost in all this is, however, is that with all the truly despicable things going on online, why the heck are Spitzer’s people spending taxpayer dollars on what, at most, amounts to some consumers getting some e-mail against their wishes?
This is not to say companies shouldn’t keep promises made in their privacy policies, but people in Gratis’ files have clearly demonstrated they are open to promotional material online. Under the federal Can-Spam Act, they can opt out any time. It is unlikely that anyone in this case is being duped out of their retirement savings.
Moreover, Datran hired former Federal Trade Commissioner Christine Varney to represent it in its dealings with Spitzer.
Christine Varney? Eliot Spitzer’s Internet team? That’s one heck of a lot of fire power wrangling over promotional e-mail that—let’s be honest here—probably hurt no one.
If these people don’t have anything better to do, the Internet has truly been tamed.
Unfortunately, we all know better.
We aren’t sure what to think about this whole business. Any ideas out there?
Send them to ken.magill@penton.com.
