Somewhere, a Yahoo Marketing Executive Dances on Spitzer’s Grave

Four years before he became infamous as “Client No. 9,” disgraced former New York Governor Eliot Spitzer’s utter lack of integrity was on full display during an e-mail marketing dispute with Yahoo for anyone who cared to see it.

Yet too few did.

On Oct. 1, 2003 the then New York Attorney General’s office published a press release saying it had reached a settlement with Yahoo that would “protect consumers from unwanted e-mail and telemarketing campaigns.”

Trouble was, Spitzer’s release was a blatant lie.

For one thing, it begged at least two questions: Why would the Web portal telemarket to people it could reach far more cheaply through its own e-mail system? And why would Yahoo engage in activity that would most certainly drive subscribers, from whom it derives ad revenue, to Hotmail?

Oh, and one other small detail: Yahoo doesn’t have subscribers’ phone numbers. It currently doesn’t ask new subscribers for them. And if it ever did, which is unlikely, the records would be a mess. Yahoo is a place where e-mail address holders can be anonymous. This is why Nigerian 419 scammers use it, remember?

Not surprisingly, a Yahoo spokeswoman at the time verified that the company never had any plans to call its subscribers.

So how did Spitzer’s settlement with Yahoo protect consumers from telemarketing? It didn’t. The release was simply a classic case of dishonest political opportunism.

Here’s the story: In March 2002, Yahoo began e-mailing notices to its then 200 million subscribers informing them it was opting them into receiving e-mail marketing messages pitching some of the Web portal’s services.

The notices did not opt Yahoo’s inbox holders into third party advertising and gave them 60 days to opt out.

When privacy zealots went predictably nuts, Spitzer smelled blood and began an 18-month investigation during which Yahoo was prevented from sending marketing e-mail to its subscribers. The investigation found—and changed—nothing.

Want proof? Go sign up for a Yahoo e-mail address. Then check the address’s marketing preferences. There will be a column of prechecked boxes indicating it has been automatically opted into 13 marketing categories .

Besides pay a small amount of money, all Yahoo agreed to do under its settlement with Spitzer that it hadn’t already done was send another round of notices before resuming the marketing plans it had all along. And that was only because the original notices were by now 18 months old.

The company also agreed to pay just $75,000 to cover the costs of the investigation. When a state attorney general settles with such a large company for such a piddling amount, it’s clear he has nothing.

But in his bid for the governor’s office, Attorney General Spitzer was all about generating headlines that hit the consumer-protection nerve of the day.

Back in October 2003—the same month Spitzer’s dishonest press release was published—the national do-not-call registry went live.

The registry—which had been accepting telephone numbers all summer—had been getting national press coverage for months.

But when it became active, coverage peaked. There was no way Spitzer would pass up an opportunity to tell consumers he had protected them from the scourge of evil telemarketers, even though he had done nothing of the sort.

And just as disgusting, the press bit on Spitzer’s public-relations smear job like the slobbering lapdogs they generally were in matters involving New York’s “Sheriff of Wall Street.”

“Yahoo users will now be protected from unwanted e-mail and telemarketing campaigns,” began an Associated Press piece. “Yahoo customers have landed a big win,” began another piece by AP.

“Yahoo agreed to alter the way it markets to its customers as part of a settlement with New York State Attorney General Eliot Spitzer,” reported CNET under the headline, “Yahoo Settles Telemarketing Dispute.”

Pardon the quibble, but Yahoo can’t have even had the records needed to telemarket to its subscribers, ergo, there could be no telemarketing dispute.

And then there was the following howler from IDG News Service: “Yahoo Inc. will change its marketing policy after being told by New York Attorney General Eliot Spitzer that its practices were ‘neither appropriate nor legally permissible,’ his office said.”

In the context of the original statement, the stupidity of IDG’s news lead was breathtaking.

Here is what Spitzer’s statement actually said: “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. Moreover, consumers need and the law requires adequate and effective notice about changes to the way a company utilizes a consumer’s personal information.”

Notice neither sentence actually says Yahoo was engaged in any bad behavior. They just state certain behavior is bad.

Never mind that the first statement isn’t even accurate—companies sure can contact people with whom they have a business relationship—that sentence could have just as easily stated that throwing puppies off highway overpasses is neither appropriate nor legally permissible. Yahoo wasn’t doing that either.

As for the second statement, Yahoo had clearly already provided adequate notice because the warnings it agreed to send as part of the settlement provided the same options, except they gave30 days less notice than the original messages.

However, reporters took Spitzer’s easy-to-ferret-out distortions and reported them as fact without even a hint of skepticism.

And journalists wonder why people hate them.

Somewhere, a Yahoo marketing executive is rightfully dancing on Spitzer’s political grave.