Labour is calling for the family business founded by Tory chairman Grant Shapps – which sells software that inflates a website's advertising revenue by copying other people's content – to be investigated by the police for possible fraud and copyright violations.

With the blessing of the party high command, Steve McCabe, a Labour MP, has written to the director of public prosecutions, Keir Starmer QC, and the Metropolitan police asking for an investigation of How To Corp, an internet marketing firm set up by Shapps and his wife in 2005, which through its website sells "autoblogging" software that creates an instant cashflow by allegedly plagiarising information.

The company also runs online forums where, the Labour MP alleges, there seems to be "active collusion … in the creation … of plagiarised content".

The letter to the DPP says that "stealing of other people's content" is an offence under the Copyright, Designs and Patents Act of 1998 which also "criminalises the communication of copyrighted works in the course of a business".

Although rarely used offences under the act, McCabe points out, "would allow a judge to impose fines and a jail term".

He also invites prosecutors to consider whether the firm is "obtaining, or attempting to obtain, a pecuniary advantage by deception has been committed".

The Guardian first revealed that How To Corp's premier product – a $497 (£313) software package, TrafficPaymaster – created web pages by "spinning and scraping" content and sought to attract advertising, in contravention of Google's code of conduct.

In response Google said it would blacklist sites created by TrafficPaymaster.

Shapps told the Guardian the company was conceived as a partnership between his wife and himself in 2000 although it was first registered as a company five years later. Going under the name Michael Green and casting himself as an internet marketing guru, Shapps in 2007 claimed audiences could "make $20,000 in 20 days guaranteed or your money back" – if they spent $200 buying his bespoke software.

The picture used to illustrate Michael Green on the site is that of a model that can be brought for generic use on websites for as little as $125.

A year later 2008 Shapps transferred his share of the company to his wife, Belinda, and the Tory chair says he has nothing to do with the firm. Michael Green has been replaced by Sebastian Fox as the face of the company – although the two pseudonyms appear interchangeable.

Labour say that "in having used the software, the law may have also been broken by users, including 'Seb Fox' of How To Corp".

Shapps said TrafficPaymaster was created two years after he left the company. Belinda Shapps did not return calls.

A Conservative party spokesman accused the opposition of wasting police time, saying that the firm had "no charges to answer".

He said that Sir Bob Kerslake, the permanent secretary when Shapps was housing minister, had made it clear the Tory chair had "no declarable ministerial interest".

"Not content with unnecessarily taking up the time of [Sir Bob], who has firmly slapped him down, McCabe has now gone a step further – wasting valuable police time to try to score a few political points."