Social Networking Site 'Annoying' or Illegal?

taggedABC News Photo Illustration

When Time magazine reporter Sean Gregory got an e-mail from a friend saying she'd posted photos on the social networking Web site Tagged.com, he logged on to see them.

But there were no pictures, and his friend did not send him the e-mail. Instead, Gregory says, it was a ruse designed to steal his online address book.

VIDEO: Tagged.com is under investigation for stealing information from millions.Play
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"As soon as I clicked it, I got these e-mails from my wife and best friends saying, 'What the heck is this? Should I touch this?'" Gregory recalls. "It made me so angry that I wrote about it for Time.com."

The headline on his article, "Tagged: The World's Most Annoying Web site," expresses his frustration.

But the New York attorney general's office says the site did more than just annoy the e-mail recipients: The office is investigating claims the company stole personal contact information from millions of unsuspecting people.

VIDEO: The social networking company has simplified the security settings.Play
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Gregory, investigators say, was one of 60 million people -- and 5 million in New York alone -- allegedly duped by Tagged.

The allegations involve a practice called "contact scraping," which security experts say is a growing, invasive form of identity theft.

Investigators say the site uses a person's e-mail address to lure his or her friends and associates into giving up their personal contacts.

Stolen IdentityPlay
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Here is how investigators say the process works: After a user logs in to a social networking Web site, the site captures the user's contact list, which is often stored in an e-mail account. The site then uses the contacts it takes to send e-mail "invitations" or updates to everyone in the contact list on behalf of a user.

Tagged.com Faces Claims it Spammed Users' Contacts

Experts say many social networking sites legitimately ask a user's permission before taking contacts or sending e-mails to them.

But the New York attorney general's office says it believes Tagged.com did not fairly obtain permission to use the e-mail addresses and other contacts it took.

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Benjamin Lawsky, deputy counselor and special assistant to New York Attorney General Andrew Cuomo, says Tagged.com's methods were a form of identity theft, which the office believes violates state law.

"It's like breaking into somebody's home, stealing their address book, and sending letters to all of their friends … and pretending to be them," charges Lawsky.

He says that because each new person who received an e-mail from Tagged.com potentially then gave up his or her contact list to the company, the fallout could be "enormously damaging" both personally and professionally, since people who receive the e-mails could lay the blame on the person who appears to have sent the messages instead of on Tagged.com.

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Gregory says that was part of his frustration. "Every little impression you make counts," he says. "I don't want a business contact to think I sent them an e-mail inviting them to see pictures of me."

Lawsky told ABC News that the attorney general's office believes Tagged.com's messages constitute a "really virulent form of spam" and that the actions were not likely a mistake -- and, he says, even if they were, the activity went on for more than three months and had the blessing of the company's CEO, even after the site received complaints.

On Wednesday, the attorney general's office sent a letter to Tagged.com's attorneys, notifying the company that it intends to sue over the alleged violations unless the company gives them a reason not to do so.

New York Attorney General's Office Probing Tagged.com

ABC News obtained a draft of the letter, in which the attorney general's office claims the site broke laws designed to protect consumers from deceptive business practices. It also alleges false advertising and the misuse of the registrants' identities.

Tagged issued a statement to "Good Morning America" apologizing for any problems, noting that the company has been "in full cooperation" with the New York attorney general's office as it conducts its investigation.

"We continue to cooperate with them, we thank them for their helpful guidance, and we hope to resolve this issue amicably without litigation," Tagged co-founder and CEO Greg Tseng said in the statement.

Last month, Tseng posted a lengthy statement on Tagged.com that offered an explanation and an apology for the problem. Noting the company's growth as a social networking site, he said that a new registration process tested out by the site prompted almost 2,000 complaints "from people who invited all the contacts in their e-mail address books but didn't intend to" because the registration process wasn't clear.

Tseng said the site halted the new registration procedure, sent an explanation to the new members who had sent invitations, including instructions on how to cancel their memberships if they chose to do so.

The separate statement Tseng sent to "Good Morning America" also offered an apology and invited users who'd had a negative experience back to the site.

"We humbly ask them to give us a second chance and consider joining the millions of happy members who use Tagged every day, including many from New York," the statement concluded.