Plaintiffs claim that Yahoo regularly uses its relationship with adware and typosquatting sites to gin up extra revenue around earnings time, alleging that the company is conspiring to boost revenue by partnering with some of the Internet's seamier characters.

The lawsuit states: "Not only have Defendants turned a blind eye to abuse of their [pay-per-click] advertising system, but Defendants knowingly have manipulated that system for their own benefit, by increasing the volume of improper advertising displays during financial reporting periods when Defendants were at risk of failing to meet investor expectations."

The suit alleges that Yahoo defrauded pay-per-click advertisers who thought they were paying to have their ads displayed alongside search-engine results generated by certain keywords that the advertisers bid on. The complaint alleges that "by placing ads into illegal platforms such as spyware programs, [Yahoo] wrongfully collected high search engine advertising fees for ads that are actually shown in contexts that are worth far less, if anything. It is well known that spyware advertising is much cheaper than search engine advertising."

The complaint continues: "But when Defendants and their syndication partners place class members' ads into spyware, they continue to charge class members full price for those ads, and pocketing the difference between the high fees class members pay and the low cost of providing spyware-delivered advertising."

Among the "spyware vendors" named in the complaint as partners in Yahoo's ad program are Direct Revenue and Intermix, two companies recently sued by New York Attorney General Eliot Spitzer for violating consumer protection laws.

The class-action suit includes examples of customer ads shown on typosquatting sites, such as "Expedai.com," a "parked domain" which includes a Yahoo ad for the real Expedia.com. Expedia would be required to pay Yahoo and the owner of that typosquatted domain a hefty fee each time someone clicks on the Expedia link on that site.

Yahoo is already dealing with "click fraud" claims that it overcharged customers for advertising, a very real problem that is costing legitimate online businesses tens of millions of dollars each year by some estimates. One of those suits was filed in California, and the other in Arkansas. The latter suit also named Google, which agreed to pay up to $90 million to settle the case.

The company named as a plaintiff in the suit was Crafts by Veronica, of Newark, NJ. While the case was filed in New Jersey, any Yahoo customer regardless of which state they reside in would be considered a member of the class should a court certify the lawsuit and allow it to go forward.

The lawsuit is open to any company that pays Yahoo to display their ads on search results.