Yahoo caught on the wrong foot

SAN FRANCISCO (Reuters) - Yahoo Inc. said it would pay $75,000 as part of a settlement with the New York Attorney General's office concerning its marketing practices.

Under the agreement, Yahoo will pay the costs of an investigation into marketing changes it made last year, clearly notify consumers of any marketing policy changes and allow them ample time to opt out of promotional lists.

The settlement ends an investigation New York officials launched after Yahoo told registered users in March 2002 that it was changing its marketing policies.

At that time, Yahoo told users they would receive marketing promotions within 60 days unless they went to a privacy preference page on the Web site and indicated that they did not want to receive marketing targeted for different interests.

Previously, consumers signing up for a Yahoo account were simply asked to indicate whether or not they wanted to receive marketing.

"It is neither appropriate nor legally permissible for a company to compile a database of personal information through an online registration process and then attempt to use the information for telemarketing purposes to target consumers who have stated that they do not want to receive solicitations," New York Attorney General Eliot Spitzer said in a statement.

"Moreover, consumers need, and the law requires, adequate and effective notice about changes to the way a company utilizes a consumer's personal information," he said.

Under the settlement, Yahoo must send an e-mail to registered users telling them about any marketing policy changes, telling them how they can decline and giving them 30 days to opt out of related promotional campaigns.

Yahoo also agreed to not market to consumers who supplied a telephone number and who had declined marketing previously.

In general, Yahoo has no plans to market its consumer services over the telephone, a spokeswoman said.

© Reuters