Who's running the Yahoo e-mail store?

Yahoo is being sued in a California class action lawsuit for misrepresenting the terms of its paid premium e-mail service, Google Watch has learned. The suit comes in the same month that the company is being sued for $20 million for illegal use of an image in its e-mail marketing materials.

In a complaint filed earlier this month in California federal district court, the litigant claims that she purchased Yahoo's $35 per annum Personal Address e-mail service, which, among other things, offered e-mail service with no advertisements attached. After purchasing the premium e-mail option however, the litigant claims the advertisements continued to appear.

When she brought this matter to Yahoo's attention, Yahoo representatives said that the company's e-mail advertising policy had changed, and that all e-mail services except for the most expensive service would now contain advertisements.

According to the complaint, Yahoo representatives offered to refund $10 of her $35 fee, stating that the other $25 could not be returned because it was used to purchase a domain name for the user under the terms of the Personal Address service. 

According to the complaint, the class action is brought for "All persons in the United States who purchased Yahoo! Mail Personal Address during the period March 12, 2003 to the present." 

The complaint alleges Yahoo is guilty of fraud, breach of contract, unfair competition and unjust enrichment. 

Yahoo representatives did not immediately return a call seeking comment. Lawyers for the litigant did not respond to e-mails. 

Yahoo reported 15.5 million paid users in its 3Q 2006 filing with the SEC, an unknown portion of which pay for premium e-mail services. The portion of users paying for Yahoo services increased 36 percent year-over-year, although average monthly revenue per user declined from $4 to $3.50, reflecting "continued growth of paying users in our services with lower fees," according to Yahoo.