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FOR IMMEDIATE RELEASE
June 21, 2007
McKenna Announces Settlement with Privasafe and SurfSafe Operators

Thousands of Washington Consumers Eligible for Refunds

SEATTLE – Attorney General Rob McKenna today announced that thousands of Washington consumers are eligible for refunds under a settlement with the operators of www.privasafe.com and www.surfsafeinternetservices.com that could ultimately cost the defendants $1 million.

“Consumer Digital Services, JSE Direct and their subsidiaries advertise on their Web sites that they will ‘protect your computer and privacy’ and guard you from ‘unscrupulous marketers,’” said Attorney General Rob McKenna. “But an investigation by our Consumer Protection Division High-Tech Unit found that their business practices were in conflict with their marketing pitch. While promoting their Privasafe and SurfSafe products, the defendants sold the personal information of thousands of consumers and billed consumers for services they did not want.”

In a consent decree filed today in King County Superior Court, defendants did not admit to any wrongdoing but agreed to provide full refunds to Washington consumers who were billed for Privasafe or SurfSafe Internet services anytime since Jan. 1, 2004. Defendants will notify eligible consumers by e-mail and mail.

The following defendants are parties to the settlement: Consumer Digital Services, LLC, and its subsidiary Privasafe, LLC; JSE Direct, LCC; and its subsidiary SurfSafe Internet Services; Leverage-CDS, LCC; CDS Family Trust; AMP-CDS, LCC and JG-CDS, LCC. All are located in Fort Lee, N.J.  Gary Salmirs, manager of Leverage-CDS, is also a defendant. According to a complaint filed by the Attorney General’s Office, Salmirs controlled Consumer Digital Services’ policies and practices.

The defendants agreed to a variety of injunctive provisions related to how they conduct business in the future and will pay $100,000 in civil penalties and $200,000 in attorneys’ fees. An additional $200,000 in civil penalties is suspended as long as they comply with the settlement terms.

The Attorney General’s Office alleged the defendants lured Washington consumers with online offers for “free” gift cards and merchandise including flat-screen monitors. The “free” products were promoted through pop-up ads, Web site banner ads and e-mail messages.

Consumers submitted their personal information including their address, e-mail address, telephone and birth date, believing they would receive the “free” product. They were subsequently charged $14.95 charge on their monthly phone bills for defendants’ Internet-related services, including e-mail accounts, security-related products and increased Internet connection speed. Defendants used third-party billing companies such as ACI Billing Services and ILD Telecommunications to place the charges.

“More than 13,000 Washington consumers have been billed for Privasafe and SurfSafe since January 2004 to a tune of more than $750,000,” McKenna said. “Only one Washington consumer received the advertised ‘free’ item.”

The bottom of the Web page, viewable only by scrolling down, included a statement that individuals who completed the form would be charged and that only those who paid the $14.95 monthly fees and remained in good standing for 90 days would receive the “free” item.

The statement also included a link to a privacy policy that waives the consumer’s rights under federal laws that restrict telemarketing. The Attorney General’s Office alleged the defendants sold personal information provided by thousands of Washington consumers to numerous third-party marketers.

“The product promotions were a means to obtain personal information. Consumers never saw the statement or the privacy policy,” said Assistant Attorney General Katherine Tassi, of the Consumer Protection High-Tech Unit. “Defendants discouraged scrolling by placing a large button starting ‘click here to continue’ at the bottom of the viewable portion of the Web page.”

The Attorney General’s Office said many consumers who discovered the charges on their phones bills had no idea what they were paying for and who was billing them. To date, more than half of Washington consumers who were billed for the services have requested refunds. Fewer than 5 percent of Washington consumers who were billed ever downloaded the software necessary to use the service.

As a result of the Attorney General’s investigation, the defendants are no longer billing Washington consumers. Today’s settlement prohibits them from selling or sharing any information collected from or about Washington consumers since Jan. 1, 2004.
The settlement terms require the defendants to disclose costs and billing methods for its products prior to collecting personal information from consumers and accurately represent the purpose for collecting and using personal information. They must clearly and conspicuously disclose the terms that apply to any “free” offer and cannot use a pre-checked box to indicate a consumer’s authorization to be billing for a product or service.

Consumer Refunds:
Washington residents who were billed for Privasafe or SurfSafe Internet Services since Jan. 1, 2004, are eligible for full refunds. Under the settlement agreement with the Washington Attorney General’s Office, the defendants must notify eligible Washington consumers that they are entitled to a refund.

Washington residents who believe they are eligible for a refund should monitor their e-mail for a message from the defendants that they are eligible for a refund pursuant to the settlement agreement reached between Consumer Digital Services and the Washington Attorney General’s Office. Consumers should receive the e-mail within the next month. Letters will be mailed to consumers who haven’t replied to the e-mail within 60 days. Therefore, consumers who do not receive an e-mail within the next month should monitor their mailboxes.

Consumers who receive an e-mail message or letter must submit forms within 60 days of receipt.

Both the e-mail message and mailed letter will include a claim form that instructs consumers to provide their name, telephone number billed by the defendants, mailing address and the amount they paid.

Important warning for consumers: Con artists have sent letters to Washington residents informing them that they have received payments from a lawsuit settlement. The mailings often include counterfeit checks. You should be especially suspicious of letters and phone calls originating from outside the United States in which you are asked to provide money or personal information. If you receive a legitimate e-mail from Consumer Digital Services, you will not be asked to provide a bank account number or other financial information.

Additional Materials:

Consumer Digital Services et al Complaint

Consumer Digital Service et all Consent Decree

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Media Contacts: Kristin Alexander, Seattle Media Relations Manager, (206) 464-6432
Katherine Tassi, Assistant Attorney General, (206) 389-3974

Editor’s note: The word “safe” is spelled with a lowercase “s” in Privasafe and an uppercase “s” in SurfSafe on company Web sites.

 

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