Yahoo Faces Class-Action Spyware, Ad-Sales Suit

An antispyware activist and lawyer has filed a class-action lawsuit against Yahoo, accusing the Web heavyweight of placing advertisements on spyware-vendor and "low-quality" sites.

Ben Edelman, a Massachusetts lawyer and spyware researcher, is one of the lawyers who filed the lawsuit earlier this week on behalf of Yahoo advertiser Crafts By Veronica, as well as other advertisers. The lawsuit, filed in U.S. District Court in New Jersey, accuses Yahoo and its ad sales subsidiary Overture Services of charging higher rates for ads promised "premium" placement, but then placing those ads on spyware-vendor sites and on Web pages with URLs that are misspellings of popular sites.

A Yahoo spokeswoman wasn't immediately available for comment.

Money Matters

The lawsuit seeks to recover the money advertisers paid to Yahoo for premium, "highly targeted," ad placement at Web sites including ones owned by Microsoft and CNN, Edelman said. Although plaintiffs' lawyers have not released an estimate of damages, it could run into the hundreds of millions of dollars, he added.

"It seems like there's a lot of money at issue," Edelman said.

The lawsuit accuses Yahoo of placing ads on sites run by Intermix Media and Direct Revenue, two companies identified in an April lawsuit by New York Attorney General Eliot Spitzer as distributors of spyware and unwanted pop-up adware. Both companies have disputed Spitzer's charges.

Edelman agrees with Spitzer's assessment of the two companies, he said. "It's software that at least sometimes gets on your computer without your permission," he said. "It tracks where you go online."

In addition, Yahoo places ads on so-called "typosquatting" Web sites, the lawsuit says. Typosquatters register Web sites that have URLs that are common misspellings of popular Web brands, and many typosquatting sites that Yahoo placed premium ads have long lists of advertisements as their only content, the lawsuit says. Ads placed with Yahoo have appeared on Expedai.com, a typosquatter of the popular Expedia.com travel site, the lawsuit says.