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Student Marketing Group Inc. has settled a lawsuit with New York State over allegedly deceiving students into supplying information for mailing lists.

After an attempt to dismiss the case was rejected, Student Marketing Group settled to avoid the expense of protracted litigation, the firm said in a statement.

The firm did not admit any wrongdoing but agreed to include specific disclosures that the information collected from students may be used for non-educational marketing purposes.

Jan Stumacher, president of Student Marketing Group, could not be reached for comment.

The AG’s office confirmed the settlement and said that Student Marketing Group, as part of the settlement, would pay the state $75,000 to cover its investigative costs and agreed to comply with state law, spokesperson Marc Violette said.

A similar investigation is underway by the Federal Trade Commission, which expects to reach a settlement with Student Marketing Group within the next few weeks, sources close to the investigation said.

The lawsuit was filed in August 2002 by New York State Attorney General Eliot Spitzer, which accused Student Marketing Group of deceptive business practices and other violations of the state’s consumer protection laws.

The AG had said that the firm deceived teachers into passing out surveys to students telling them in a cover letter that the data was intended for "university financial aid offices and scholarship foundations." The data was rented to marketers of music videos, credit cards, clothes, cosmetics and student loans, Spitzer said at the time.

To facilitate the survey effort, Student Marketing Group had created a not-for-profit front called the Educational Research Center of American (ECRA) and provided it with a Washington, DC, address to convince teachers and students that it is was a governmental educational institution, Spitzer said.

ECRA has mailed an annual survey to teachers of 14 million students nationwide since 1999. In New York, it sent surveys to tens of thousands of faculty members at nearly 2,000 educational institutions, the AG said.