Yahoo Slapped with Spyware Syndication Fraud Suit

Anti-spyware activist Ben Edelman has filed a class-action lawsuit against Yahoo, accusing the online media giant of partnering with spyware purveyors to perpetrate syndication fraud against advertisers.

The bombshell suit, filed in the U.S. District Court in New Jersey, also alleges that Yahoo used its Overture pay-per-click advertising network to make money from the practice of typo-squatting, in which slight variations of popular URLs are registered so as to serve ads to users who type in misspelled versions of domain names.

A Yahoo spokesperson declined comment on the suit. “We will vigorously defend our position,” the company said in a statement sent to eWEEK.

The suit comes less than a month after Edelman blew the lid off a spyware-powered click-fraud scam using the Yahoo-owned Overture pay-per-click network to swindle advertisers. Yahoo has also been closely linked to Direct Revenue, an adware vendor that was recently sued by the New York attorney general’s office.

According to Edelman’s suit, Yahoo has routinely breached agreements with advertisers and placed advertising in spyware programs that serve annoying pop-up ads. Instead of “highly targeted” ads being placed on “high-quality” sites, Edelman alleged, ads are actually routed to low-quality sites without bona fide content, constituting syndication fraud.

To read more about a spyware-powered click fraud that was linked to Yahoo, click here.

The suit also alleges that Yahoo’s pay-per-click network is easily abused when competitors click on an advertiser’s ad for the sole purpose of hiking that advertiser’s cost.

“[Instead] of safeguarding against such abuse, finding such practices and diligently putting a stop to them, [the] defendants have actually engaged in such abuses,” the complaint said.

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