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13 September 2003

LookSmart Settles Class Action

Search company LookSmart Ltd has settled a class action lawsuit brought against them on behalf of customers who paid for site submission before the Directory converted to a paid listings model in April 2002. LookSmart has agreed to provide compensation to these customers in the form of cash payments and/or additional paid listings.

>> According to documents received from LookSmart, the litigation comprises the cases of Legal Staffing Partners, Inc. v. LookSmart, Ltd., San Francisco Superior Court Case No. 02-407778, filed May 9, 2002, and Kramer v. LookSmart, Ltd., et al., San Francisco Superior Court, Case No. 02-410034, filed July 9, 2002.

The company has sent emails to all their customers who have rights to compensation under the settlement agreement. Details of the settlement are as follows:

1) If you submitted a listing to LookSmart during their "one time fee period" from May 13, 1998 and April 9, 2002 and you were a current customer of LookSmart (i.e. if you have kept your URL listings in their directory) until September 5, 2003, you are entitled to 100 free clicks per month up until December 11, 2003.

2) If you submitted a listing to LookSmart during their "one time fee period" from October 9, 2001 and April 9, 2002 and you were a current customer of LookSmart (i.e. if you kept your URL listings in their directory) until September 5, 2003, you are entitled to 75 additional free clicks per month from December 12, 2003 to June 12, 2004.

3) If you submitted a listing to LookSmart during their "one time fee period" from April 9, 2001 and October 8, 2001 and you were a current customer of LookSmart (i.e. if you kept your URL listings in their directory) until September 5, 2003, you are entitled to 50 additional free clicks per month from December 12 2003 to June 12 2004.

4) If you submitted a listing to LookSmart during their "one time fee period" from May 13, 1998 and April 8, 2001 and you were a current customer of LookSmart (i.e. if you kept your URL listings in their directory) until September 5, 2003, you are not entitled to any additional free clicks per month beyond the 100 per month provided until December 11 2003.

5) If you submitted a listing to LookSmart during their "one time fee period" from May 13, 1998 and April 9, 2002 and you are no longer a current customer of LookSmart (i.e. if you canceled your URL listings in their directory after April 9, 2002 and before September 5, 2003,) you are entitled to receive an individual cash payment of up to USD 50 per listing by using their Claim Form.

Prior to LookSmart's conversion to a pay-per-click model in April 2002, many customers had paid LookSmart what had been described as a "one time fee" to have their sites reviewed and permanently included in the search directory. These customer accounts were automatically rolled-over into paid listings with the introduction of LookSmart's pay-per-click service in April 2002.

LookSmart did not offer to "grandfather" those listings, as is traditional in the industry, instead offering existing customers 100 free clicks per month, after which time the listings would be removed until the start of the following month.

LookSmart's actions resulted in a huge public backlash amongst their customers, countless canceled accounts and a long-term boycott against the Directory by many in the search engine marketing industry. It also triggered a class action suit to be brought against the company.

Settlement of this suit has taken over a year and the acknowledgement that their customers are entitled to compensation as a result of their actions must be a bitter pill for LookSmart to swallow at a time when their popularity is at an all-time low.

With customer claims expected to reach up to USD 250,000 and LookSmart's legal costs revealed to be a staggering USD 600,000, it's hard to imagine the one-time search giant being able to easily recover from this.

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