Long Island Firm Sued For Tricking Students Into Providing Private Information

Attorney General Spitzer today sued a Long Island firm that deceived students across the nation into supplying personal information in order to sell targeted marketing lists to retailers.

Spitzer's suit targets Student Marketing Group, Inc. (SMG) of Lynbrook for deceptive business practices and other violations of consumer protection laws.

"As a father of school-age children, I am outraged by this company's business tactics," Spitzer said. "The company's ultimate goal was not to help students or to research educational issues. Instead, the goal was to collect personal information about students and provide it to direct marketers."

A key element of SMG's strategy was to enlist the support of teachers in having their students supply detailed information about themselves. To achieve this goal, the complaint alleges that the company established a not-for-profit subsidiary, Educational Research Center of America (ERCA), which served as a front to collect personal information that would then be provided to other companies. Those companies used the data to target sales pitches to children for items such as magazines, music videos, credit cards, clothes, cosmetics and student loans.

Since 1999, ERCA has mailed an annual survey funded by SMG to teachers of approximately 14 million students across the nation. The survey has included a cover letter noting that the information obtained through the surveys is to be provided to universities and colleges nationwide for financial aid and student scholarship foundations.

However, neither the cover letter or the survey discloses SMG's intention to use the survey data for other marketing purposes. The survey's cover letter simply represents that the information will be used "by universities and colleges nationally in their ongoing efforts to communicate and keep in touch with the interests and trends among today's high school students" and for "university financial aid offices and scholarship foundations...to evaluate and make funding available for students post secondary education."

In New York, ERCA has sent student surveys to tens of thousands of school faculty members at nearly 2,000 educational institutions.

The complaint alleges that in order for this not-for-profit entity to gain the confidence of school officials, the Pittsburgh-based ERCA maintains a Pennsylvania Avenue, Washington D.C. address, leaving addressees of its annual surveys with the false impression that it is an official government education institution. In fact, ERCA's true address is the home residence of its sole listed officer.

One of the nation's leading privacy experts assailed the company's tactics. Professor Joel Reidenberg of Fordham University said: "This case sends a strong message to companies that the stealth collection of personal information is both offensive and illegal in New York, especially when those companies like SMG abuse the trust of our schools and children. In bringing this suit, Elliot Spitzer continues to demonstrate that he is one of the nation's foremost leaders in protecting citizens against privacy invasions."

Spitzer's office is seeking a court order barring SMG and ERCA from utilizing the data collected by the scheme and from any further deceptive acts, as well as civil penalties for violating the law and court costs

Since 1998, SMG has been in the business of collecting and compiling data about children and young adults - from preschool through college - including names, addresses, age, gender, religious affiliation, ethnic background, e-mail address, grade point average, career interests and sports participation. SMG's lists are amassed and rented to retailers and other parties "to identify and reach those students most likely to become your customers," according to SMG's website.

SMG claims to provide its list brokering services to such significant commercial customers as AT&T, Chase Manhattan Bank, Citibank Mastercard and Visa, Mutual of Omaha Companies, and Reader's Digest.

This case is being handled by Assistant Attorneys General Stephen Mindell and Herbert Israel of the Consumer Frauds and Protection Bureau.