Infobeat Settlement Resolves Website Privacy Violation

Attorney General Spitzer today announced a settlement with a leading internet company over allegations that the company violated its own privacy policy.

InfoBeat, which provides e-mail services to more than two million people nationwide, was revealed to have disclosed confidential information about its customers to advertisers. The disclosures -- which were made inadvertently according to InfoBeat officials -- violated the company's website privacy policy of not sharing personal identifying information with third parties.

"It is critically important for the continued expansion of e-commerce that companies establish sound privacy policies and make every effort to abide by those policies," Spitzer said.

InfoBeat, a subsidiary of Sony Music, offers free consumer e-mail services, including personalized coverage of news, sports, finance, weather and the entertainment industry, all sent via e-mail. In lieu of subscriber fees, the company sells advertisements in its e-mail newsletters.

InfoBeat's Web site contains a "Statement of Integrity," and "Terms of Service" which explain that InfoBeat uses demographic information it collects to select appropriate advertisements for its subscribers. The company explicitly promises that it "will never release, sell or give a subscriber's name or e-mail address to any other party or organization, without the subscriber's explicit permission."

The company, however, had been disclosing to certain third party advertisers the e-mail addresses of those subscribers who clicked on certain banner advertisements that were embedded in the html version of its online newsletters. In addition, InfoBeat inadvertently included certain subscriber demographic information in the hidden header portion of its html newsletters, which subscribers might have inadvertently disclosed when forwarding the message to others.

These disclosures were attributed to a software problem that has since been corrected, according to company officials.

Spitzer noted that the company cooperated fully in addressing the problem. Under the terms of the settlement, InfoBeat will take further steps to guard against unauthorized disclosure of confidential information about its customers. This includes hiring an independent auditor to review the accuracy of its privacy pledges. In addition, InfoBeat agreed to pay the Attorney General $75,000 for costs of investigation.

The case was handled by Assistant Attorney General Eric A. Wenger of Spitzer's Internet Bureau, under the direction of the Internet Bureau Chief Caitlin J. Halligan. Attorney General Spitzer also acknowledged the cooperation of Internet security expert Richard M. Smith in conducting the investigation.

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