Commissioner John Edwards said the update - which came into effect earlier this month - contained some ambiguities and he wanted to make sure it had been handled responsibly and transparently.
Spokesperson Logan Mudge said it took its members' privacy extremely seriously and were committed to being honest and open about how and why information was collected and used.
"The change allows us to personalise Trade Me messaging to our members. For instance we could provide details on a sports gear sale if they'd been searching for a rugby ball onsite, or show a message about Trade Me Motors Background Checks to someone who was listing their car. Or we could offer someone a $5 Trade Me credit if they hadn't been onsite for a while."
The change was designed to provide a more personalised experience to members, but people could opt out if they wanted, he said.
"There has been no change to our approach to third parties - if you opted out you will not receive targeted third party advertising on Trade Me. We do not sell or provide personalised data to third parties or other organisations.
"Anyone who doesn't want to get Trade Me messaging can opt out of our emails."
"We're surprised by this move from the Office of the Privacy Commissioner, we have offered to sit down and speak with them further about this change on several occasions. We stand by our decision to make this change, and making Trade Me more customised and relevant to our members."