Inc. 500 Firm Denies Wrongdoing in Lawsuit

Gratis Internet faces charges of selling customer e-mail addresses to marketing agencies.

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Gratis Internet, an Inc. 500 online-marketing company, has issued a public defense in response to a new lawsuit that claims it sold personal customer information, calling the charges "completely untrue.

The Washington, D.C.-based firm, which ranked No. 18 on the 2005 Inc. 500 list of the nation's fastest-growing private companies, said it maintains full control and ownership of its user information and "never, not once, profited from any sale of data," according to a statement on the company's Website.

On March 23, New York Attorney General Eliot Spitzer filed suit against the company, which offers free iPods, flat-screen TVs, and other products to users who agree to sign up for offers from its advertisers.

The suit claims Gratis repeatedly violated a promise of confidentiality by selling lists of millions of users to three independent e-mail marketers between 2004 and 2005. The marketers then sent hundreds of millions of e-mails to these users on behalf of their own clients.

Earlier this month, Datran Media, one of the e-mail marketers named in the suit, settled with Spitzer for $1.1 million over accusations it misused personal data.

"Unless checked now, companies that collect and sell information on consumers will continue to find ways to erode the basic standards that protect privacy in the Internet age," Spitzer said in a statement.

For its part, Gratis said it hired Datran and two other firms to oversee "creative design and back-office support" for its e-mail marketing operations.

"The companies acted on Gratis' behalf to send promotional e-mails to its own users," the company said, calling it "commonplace, industry-wide practice."