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Thread: Google Sued For Click Fraud

  1. #1
    Senior Member jmiller's Avatar
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    Google Sued For Click Fraud

    A class action lawsuit was filed in US District Court against Google alleging breach of contract, negligence, unjust enrichment, and unfair business practices—all involving charges of click fraud. Click Defense Inc, a click fraud protection firm, filed the suit in California in the name of an unknown number of plaintiffs for an amount not less than $5 million.

    Of course, one should always consider the plaintiff in any suit presented. The publicity gained through this type of action is worth its weight in gold--especially to a click fraud business whose bread and butter is identifying click fraud and getting money back for its clients.


    Click fraud is the term used in the Internet search industry to describe the practice of clicking on search advertisements to run up the costs on advertisers.

    Companies buy an advertisement through Google’s AdWords program, whereby certain keywords are purchased in order to appear in the sponsored links section of the search engine’s results page.

    Advertisers bid upon the search terms with the top spot going to the top bidder. Once the advertisement is in place, advertisers pay a fee to the search engine each time the ad is clicked by a searcher.

    Click fraud, estimated by some to be as high as 20% of all clicks, is caused by those with a vested interest using software that clicks on the ad hundreds or thousands of times to either drain the advertising budget of a rival company, or create revenue for the seller of the ad space.

    Colorado-based Click Defense, a company that specializing in procuring rebates for advertisers, says the average cost per click is 50 cents, but prime search engine real estate can go for as much as $100. Disputing the 20% estimations, Click Defense alleges that click fraud on Google is as high as 38%.

    The lawsuit claims that since 99% of Google’s revenue comes from advertising, Google has a huge financial interest in doing little about the instance of fraudulent clicks and criticizes the search giant for failure to disclose its own estimate of the number of fraudulent clicks.

    The suit fall just short of accusing Google of physically performing the click fraud itself. The most visible allegation is the charge of negligence on the part of Google, claiming that Google isn’t doing enough to prevent the problem.

    Click Defense argues that the same software Google uses to track the number of clicks on an advertisement and then bill advertisers could be used to investigate and identify instances of click fraud.

    Google’s terms of use with AdWords promises a refund in any event of identifiable click fraud. According to Google’s 2005 Annual Report, click fraud is a major concern of the search engine.

    “If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby causing our business to suffer,” as stated in the report.

    Google, who reported a first quarter net profit of $1.3 billion, is dismissing the claims of Click Defense.

    "We believe the suit is without merit and we will defend ourselves against it vigorously," a Google spokesman told Reuters.
    It is important to note that Click Defense Inc. makes money by promising protection against click fraud and procuring refunds for client advertisers. The plaintiff in this lawsuit seems especially suspect considering the nature of the business it is in.

    That Click Defense is accusing Google of having a financial interest in not detecting click fraud is a little bit funny as Click Defense has a definite financial interest in nailing Google for it.

    A jury has been demanded to investigate the claims and they will ultimately decide, if the case goes to trial, whether there is sufficient evidence of the charges brought against Google.
    "I never met a Kentuckian who wasn't coming home."--Governor Happy Chandler

  2. #2
    Senior Member coder's Avatar
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    So would the jury comprise of google's peers? I'm sure Yahoo, MSN and a few other would volunteer members to sit in on the jury.

  3. #3
    Senior Member xmx's Avatar
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    Maybe this means that PPC is not a so good solution?

    Wouldn't it be better if instead of being paid per
    click these giant online advertising networks were
    paid a % of the money they make earn to their
    customers/advertisers?

    Yes, they should receive money for the money they
    make earn, as it is done with affiliates.
    There would be no more click fraud going on.

  4. #4
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    Click Defense argues that the same software Google uses to track the number of clicks on an advertisement and then bill advertisers could be used to investigate and identify instances of click fraud.
    Hmm. Wonder if one of their motives for the case might be to get access to that software for their OWN business? If they can argue that Google's patent on it is causing fair trade issues, that might be possible.

    I know click fraud is rampant, and I know Google's in a position to benefit financially from allowing it to take place. But that doesn't mean they really are doing anything wrong. Or even failing to do the very best they can to prevent it. They must also realize that if they ever got caught allowing click fraud, they'd lose some very lucrative accounts right at a point where ppc advertising is poised to either start competing with print and screen marketing, or flop on its belly.

    I'll be very interested to see Click Fraud's evidence against Google. Somehow, it just doesn't sit right for me that the first major legal action is coming from someone who has a vested interest in proving that Google commits click fraud.

  5. #5
    Senior Member mlevenhagen's Avatar
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    Quote Originally Posted by xmx
    Maybe this means that PPC is not a so good solution?

    Wouldn't it be better if instead of being paid per
    click these giant online advertising networks were
    paid a % of the money they make earn to their
    customers/advertisers?

    Yes, they should receive money for the money they
    make earn, as it is done with affiliates.
    There would be no more click fraud going on.
    It's still a great solution. They just need to get better at detecting it... or use the tools they have to do it.

    I am surprised they are saying that click fraud accounts for 20% of all clicks...

    I doubt it effects every industry though. It's probably more prevelant in the big markets like mortage, insurance, real estate etc...

    The little guys probably aren't effected as much.

    I don't think PPC is a bad thing....but maybe this suit is a good thing. Maybe Google could be doing more.

  6. #6
    Senior Member xmx's Avatar
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    Hi Matt,

    I just added a personal idea that paying a % of the
    earning that come from the advertising network could
    be a better solution. It would be for me.

    From what jmiller wrote it seems that click fraud
    is in the range 20% / 38%.
    Both these figures are alarming in my opinion.

  7. #7
    Senior Member mlevenhagen's Avatar
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    I know xmx...

    You could do this already though. You could design a series of little ads similar to Adsense and have your affiliate programs...

    OF course, it wouldn't be as easy as a feed is... you got a good idea. ;)

    No doubt it's alarming. I think something does need to be done. I'm actually interested to see how this turns out and if they could be doing more.

    I always try to defend what Google does, but it is true... they don't lose money from click fraud.

  8. #8
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    Somehow, it just doesn't sit right for me that the first major legal action is coming from someone who has a vested interest in proving that Google commits click fraud.
    I think it makes perfect sense. And it's about time!

    I have suffered click fraud through Google AdWords so much that I have stopped advertising through Google. When I have complained in the past, it has taken up to 6 months to get any money back. And the money I did get back was a joke.

    Anyone could look at my account's history and see that click fraud was obvious. My account would chug along at a fairly steady click rate, then all of a sudden, my entire budget would get drained over the weekend on a handful of terms.

    The really upsetting part was not the click fraud, but the fact no one would ever respond to my emails. Some little commensurate refund would show up on my credit card a few months later.

    Hopefully, this lawsuit will improve things for the long-term.
    Kind Regards,
    Michael Lange

  9. #9
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    I should join them

    Hi everyone

    I was running a adwords campaign, and I had my daily budget set to $500. Everyday I was spending no more then $5 or $10 and then suddenly I got hit for $500. Lucky I was not on my holidays then but at home and I could stop the campaign on time...almost on time.

    Well, i did not even bother sending any emails, because last time i did, i got the reply after 2 months, but i think it looked like generated message.

  10. #10
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    Seems fair as we often don't really know what we are paying for. Anyway - when will some one start a lawsuit against eBay and PayPal!?!? (which I consider PROPER organised criminals)!

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