Guess Who Gets the Millions From Yahoo’s Email Privacy Settlement (Not Users)

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The Internet giant has agreed to fork over $4 million to settle a class-action lawsuit brought against it for its process of scanning email. It's easy to see how the lawyers will benefit, but the users? Not so much.

Yahoo has agreed to pay up to $4 million to settle a class-action lawsuit over email privacy. But the plaintiffs’ attorneys will keep the entire payout, and the Internet giant has only agreed to make minor changes to its email scanning practices, which is what prompted the legal action in the first place.

The class-action suit claimed that Yahoo violated the privacy rights of non-Yahoo mail users by scanning their emails – including attachments – that were sent to Yahoo email addresses and then using the data to produce targeted ads for those Yahoo users, Ars Technica reported. According to the suit, those non-Yahoo mail users “did not consent to Yahoo’s interception and scanning of their emails.”

Yahoo has agreed to pay up to $4 million, though a U.S. District Court judge still needs to approve the settlement amount. Interestingly, the plaintiffs in the case won’t see a dime of the settlement. Instead, the payout will go to Girard Gibbs and Kaplan Fox, the plaintiffs’ attorneys.

The plaintiffs in the case had earlier dropped demands for statutory damages, Naked Security reports.

The settlement agreement proposed by the plaintiffs’ attorneys also won’t prevent Yahoo from scanning the emails and attachments of nonusers and using the information for targeted ads. It merely changes when the messages will be scanned. Yahoo has agreed that ingoing emails will only be “sent to servers for analysis for advertising purposes after a Yahoo Mail user can access the email in his or her inbox,” rather than before.

Outgoing messages will also continue to be scanned, but not until they are in the “sent” folder.

Yahoo maintains that the “material changes” to make its email systems accommodate the new timing of the email scans will take “substantial effort and cost.”

“Yahoo is pleased to have resolved this matter, subject to the Court’s approval,” a Yahoo spokesperson told Ars Technica. “Yahoo denies any wrongdoing and it notes that the Court has not issued any ruling that Yahoo acted unlawfully.”

Initially, six separate lawsuits were filed in 2013, accusing Yahoo of violating the privacy of its nonusers by automatically scanning their emails without consent, according to Ars Technica. But those individual lawsuits were later consolidated into one class-action lawsuit.

Yahoo’s terms of service agreement for its email accounts stipulates that Yahoo can scan email for advertising purposes. But the proposed settlement will also require that the company add this sentence to its Privacy Center page, which already outlines its email scanning system: “Yahoo analyzes and stores all communications content, including email content from incoming and outgoing mail.”

As you can probably tell by now, it’s hard to see how the plaintiffs in the case can celebrate this as a win. They are not getting paid any damages, and Yahoo will continue to scan their emails.

Are you as confused as me? What do you think about the Yahoo settlement? Share your comments below or on our Facebook page.

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