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15 October 2005  Chatmag News.

In late May of 2005, TV station KPRC in Houston, Texas aired an investigative report regarding Yahoo! chat rooms. In their report, Stephen Dean of KPRC addressed the problem of predators in the user created chat rooms.

Excerpt from the KPRC article, full article link follows in the "External Links".

"Several well known companies have pulled ads from a popular online chat room service after a Troubleshooters investigation revealed to them what their money was funding, Local 2 reported Monday in an exclusive story.

Yahoo is facing a $10 million lawsuit, accusing it of cashing in on some disturbing chat rooms. The Troubleshooters' investigation showed what's really going on in those rooms.

The companies are paying huge fees for their ads to appear on Yahoo. But many are now canceling those ads because of the Local 2 report. The discovery has prompted fast action in corporate America and a strong reaction at the nation's capital."

Several nationally known advertisers removed their ads from Yahoo! following the KPRC report.

"Countrywide Mortgage pulled its ad for refinancing because of the Troubleshooters' investigation. The company said, "We took measures to ensure that a situation like this could not occur again."

State Farm Insurance also pulled its ads, not only from the chat room but also from all Yahoo sites. The company said "We will be suspending our online advertising with Yahoo until it provides us a detailed explanation of how this situation was allowed to happen in violation of our contract, and until we receive sufficient assurance that our advertising will never again appear on inappropriate sites."

The same goes for Georgia-Pacific, maker of Brawny paper towels. Their ads were pulled and a spokeswoman said Yahoo admitted they did not adhere to the advertising contract with Brawny. The Troubleshooters found Brawny ads in a Yahoo chat room called "6 To 11 Year Old Girls Into Older Men."

Over the past years, Yahoo! had been repeatedly advised of online predators in the chat rooms and took no action, until Yahoo! began to lose advertisers over the issue.

KPRC also interviewed Anthony Gonzales, the Attorney General of The United States, who stated:

" "Short of changes in the law in Congress, we may be limited about what we can do in this area," U.S. Attorney General Alberto Gonzales said.

Gonzales told Local 2 he can't use the laws now on the books to shut down Yahoo's child sex site. "

Yahoo! is now covering the loss of advertisers by shifting the focus on an agreement with the Attorney General of New York.  It is not known whether the agreement is binding or not, Yahoo! is not a New York Corporation. Yahoo! is registered as a Delaware Corporation, with their main offices in California.

The agreement was signed on 7 October, 2005, four months after the investigative report, and subsequent closing of the Yahoo! chat rooms.

Explaining to investors that Yahoo! closed their user created chat rooms due to an agreement with the New York Attorney General is preferable to explaining why Yahoo! did nothing after receiving countless complaints over the years from chat users, acting only after the loss of several of their prime advertisers.

--Chatmag News Staff--

External Links:

Chatmag News.  Yahoo! Closes User Created Chat Rooms.

Chatmag News.  Yahoo! Chatters Irate over Chat Room Closures.

Chatmag Editorial. Changes Necessary at Yahoo! Chat.

Chatmag News.  Yahoo! Chatters React to Chat Room Closing.

Chatmag News.  Yahoo! Chatters Seek Alternatives To Closed Chat Rooms.

KPRC. Investigation Shows Big Business Funding Sex Chat Rooms.

KPRC.  Yahoo Chat Room Crackdown Affects Non-Sex Rooms.