Volume IV

Issue : 10: May 18, 2006

• Federal Court Orders Payment of $4 Million from Spyware Operator
• Nevada Regulators Endorse Wireless Gambling Company
• U.S. Supreme Court Holds That Injunctive Relief for Patents Is Discretionary
• Yahoo! Faces Class Action Lawsuit
• UK Court Approves Extradition of Hacker to U.S.
• UK High Court Permits Prosecution of Bulk Spammers
• Rockers Sue Sony Music for Unpaid Royalties on Downloaded Music
• AT and T BellSouth and Verizon Accused of Violating Privacy Laws
• Technology Firms Urge Patent Litigation Reform in U.S.
• Complaint Filed Against Googles Click-Fraud Class Action Settlement
• Apple Wins Trademark Battle Against Beatles Record Company

Home > Volume IV > Issue 10: May 18, 2006 > Yahoo! Faces Class Action Lawsuit

Yahoo! Faces Class Action Lawsuit

A class action lawsuit has been filed in a New Jersey federal court against Yahoo!, Inc. and various unnamed third parties. The basis of the claim is that Yahoo! has engaged in “syndication fraud”; advertisers pay Yahoo! to display their ads on search results for certain keywords, but the claim alleges that Yahoo! instead displays the ads via spyware, adware, and “typosquatter” websites (i.e., websites that use common misspellings of well-known trade-marks, such as “Expedai.com” instead of “Expedia.com”). Placing ads via spyware and adware is relatively inexpensive, and the suit claims that Yahoo! charges full price for the ads while only incurring the lesser charges for using spyware and adware. The added problem is that ads placed via spyware and adware are worth far less to the advertisers themselves. In other words, the advertisers are paying to have their ads placed in premium, prominent locations, but the ads are not actually displayed in that manner.

The suit also contains a more controversial claim that Yahoo! regularly uses its relationships with adware and “typosquatting” sites to generate extra revenue during financial reporting periods.

Yahoo! is already fighting other claims that it overcharged customers for per-click advertising; it seems that Yahoo!’s advertising programs will be under the legal microscope for some time to come.

The suit, Crafts by Veronica v. Yahoo!, Inc., was filed on May 1, 2006 in the United States District Court for the District of New Jersey. If the class action is certified, any Yahoo! customer in the United States would be a member of the class.

For additional information, visit:

http://blog.washingtonpost.com/securityfix/2006/05/class_action_targets_yahoo_ove_1.html