That is the argument of many when this comes up… but technically they are called “Private” messages, which implies that they are private.
I am not saying that this is a cut and dry illegal thing, walter… what I am saying is this is a grey area that could without a doubt be open to some interperetation of the law if someone really wanted to go for it (unlikely).
I think it is unethical, even if it is in your TOS, seeing as its common knowledge that 98% of your members will never read that, and I’m sure howie never read the one on my site that told him by clicking OK, he signs over all of his personal assets to me. 
The snippet in the TOS was only added after I originally said something about this… which actually presents a whole other issue dealing with the Electronic Communications Act.
If you have not informed your users as part of creating their account or revalidating their account if you are changing policies, then you are in violation of federal law and subject to imprisonment as a Class B felony, fines of up to $5000 per occurance, confiscation of the server even if it isn’t your property because it was used in commision of a felony (take notice those who run hosting services) and civil litigation by individual users.
If I were ever to start reading “PM’s” on my site, I would without a doubt change the name of them throughout the entire forum, to something that didn’t imply privacy.
Many things are going to be questioned and decided by courts of law on the “unregulated” internet, especially in the next few years. Invasion of Privacy is a big one… another is accessiblity. A disabled person WILL win a lawsuit againsts a web site or a company behind a web site for not providing that disabled person (or anyone with a given disability) with an accessible web site. Its already been ruled (last week) that a disabled person has the right to sue for this, its only a matter of time until it happens.
Imagine that… you’re telling me I own a domain, I rent web space, I put up a website for my company and I get sued because I didnt code it or design it the right way… sheesh.
Anyway… this is offtopic, in offtopic. This is dozr… signing off.