Gratis Internet, which is well-known for its offers of free iPods and other merchandise, sold personal information about 7.2 million users to e-mail marketing company Datran Media, which on Monday agreed to a US$1.1 million fine with the state of New York. Ryan Singel reported for Wired News that Gratis wasn't supposed to sell that information to third parties, per the terms of its privacy policy.

However, Gratis has had its Truste "privacy seal" revoked and reinstated several times, although Truste won't say why. The firm declined requests for comment. "Truste has long been criticized as ineffective and too eager to make apologies for companies that violate the spirit of their privacy promises," Mr. Singel wrote.

Gratis has in the past told Wired News that it never sells private information to third parties. Company co-founder Peter Martin told Mr. Singel: "Appointing a specialized vendor to manage such 'in-house' marketing operations is a commonplace, industry-wide practice. That's what happened here (between Gratis and Datran) and it is a standard and totally lawful practice."

An attorney with the Electronic Privacy Information Center commented: "Every attorney that represents a list broker is going to call their client this week and say, 'This case in New York has made law, and that law says that if you are renting a list you have to make sure the seller's website's privacy policies are legitimate.'"