Yahoo Settles Ad Placement Lawsuit

Oct 14, 2009 12:30 PM PST
SUNNYVALE, Calif. — Yahoo Inc. has settled a class-action suit after unhappy search-advertising customers sued the company over where their pay-per-click ads were showing up.

On Tuesday, lawsuit administrator Rust Consulting, a third-party firm based in Minnesota, sent an email to members of the class that preliminary court approval of the settlement has been granted.

Yahoo customers who sued claimed that when ads they placed through Sponsored Search and Contact Match, they showed up in spyware, parked sites, typosquatting sites and other dark corners of the web. The ads were supposed to appear on "highly targeted" sites.

Yahoo’s clients sued the Sunnyvale company for breach of contract, unjust enrichment, misrepresentation, civil conspiracy, and unfair business practices.

Yahoo agreed in the accord to offer a new filtering option for ads and to modify how it handles disclosures and click-fraud investigations. It also agreed to develop and offer a way for customers to control where their Yahoo Ads appear.

Yahoo will create an Ad Placement Option for advertisers to guarantee their ads will appear only on sites owned by Yahoo or sites designated as premium partners. That feature should appear early next year but Yahoo has a deadline of Sept. 30 to provide advertisers with that option.

Advertisers also will get better tools for measuring traffic quality and potentially troubling sites bearing their ads.

Yahoo class litigants are eligible for a $20 settlement, as well. The litigants must submit a claim by March 22; those ready to sue Yahoo individually need to exclude themselves from the settlement by Dec. 14.

All told, Yahoo plans to divey out $4.3 million to its clients with the agreement. Attorney fees will reach about $4.2 million.

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