Class Action Settlements: Yahoo Pay Per Click
Yahoo is a well-known search engine, Web portal and provider of e-mail, news and advertising as well as a variety of other Web-based services. Founded in 1994 by Jerry Yang and David Filo, graduate students from Stanford, it is based in Sunnyvale, California. It has the world’s largest market share in online advertising with its websites attracting over 3 billion page views per day.
Like Google, Yahoo offers a pay-per-click (PPC) advertising service whereby an advertiser has its products or services displayed on a webpage and contracts to pay Yahoo a certain sum, ranging from pennies to several dollars per ad depending on the ad placement, each time a user clicks on the ad. Yahoo contracts with the advertiser through its Sponsored Search and Content Match programs.
In 2006, a class action suit was brought by PPC advertisers who alleged that Yahoo had contracted with them to place their ads on highly targeted sites but that it allowed their ads to be displayed on spyware, pop-ups, domain name parking sites, and typosquatting sites (sites which are reached based on typographical errors by a user when inputting a website address that leads to an alternative website), thus diminishing their value as well as accessibility. The suit alleged breach of contract, unjust enrichment, misrepresentation, civil conspiracy and unfair business practices.
After three years of litigation that produced over 3 million documents on both sides, the parties agreed to a $4.3 million dollar settlement on October 13, 2009. The settlement agreement included Yahoo’s providing a filtering option for advertisements and an Ad Placement Option that would permit advertisers to specify that their ads should appear only on websites controlled or owned by Yahoo. It would also modify its click fraud investigations and would offer more complete disclosures on the Traffic Quality section of its site as to where the ads would appear It also provided for a link that would offer instructions on how to utilize the Ad Placement Option. The option would be viable for at least two years after its implementation. There was also a modification to its requests from advertisers for investigations of their partners in advertising.
Any out-of-business advertisers who were eligible members of the class could make a claim for $20 as a refund out of the $130,000 made available from the total settlement of $4.3 million. This left $4.17 million to the class action attorneys along with up to $100,000 in costs.
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