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Yahoo settles telemarketing dispute

The company says it will alter the way it markets to its customers as part of an agreement with New York State Attorney General Eliot Spitzer.

Yahoo agreed to alter the way it markets to its customers as part of a settlement with New York State Attorney General Eliot Spitzer.

Under the agreement, Yahoo will not phone people who have opted out of receiving telemarketing calls. However, the agreement does not bar the company from calling those who do choose to receive calls.

"If you previously elected not to receive information from Yahoo, you will not receive telephone communications from Yahoo," said Belinda Johnson, deputy general counsel for Yahoo.

The company agreed to pay $75,000 to cover all investigation expenses.

Yahoo also agreed to provide 30 days' notice to its registered customers before making additional changes to its marketing policies. The notices must include a "clear and conspicuous" hyperlink to a page on which consumers can make changes to how they receive marketing pitches. The page must include an option to opt out of any marketing initiatives entirely.

The investigation followed Yahoo's decision in March 2002 to revise its marketing and privacy policies. The changes required registered Yahoo users to manually opt out of receiving e-mails that promote Yahoo-branded Web services, a move that outraged many consumers who immediately labeled the new policy as an excuse to spam customers.

The new preferences were also set as a default for people to receive telemarketing calls from Yahoo about products and services.

Brad Maione, a spokesman for Spitzer's office, said the settlement was not based on a lawsuit that was filed against Yahoo. He said Spitzer was concerned that Yahoo's business policies were potentially deceptive but added that the company did not violate any laws.

"We had some concerns. They came to the table, and we negotiated a settlement," Maione said.

Yahoo last year initially gave customers 60 days' notice to set their marketing preferences. This settlement will require Yahoo to inform people again at the 30-day mark before implementing any changes.