Google, Others Face Click Fraud Charges

TEXARKANA, Ark. — After more than a year of rumor and speculation on message boards and in the online press, news broke Tuesday of a class action lawsuit accusing search engines Google and Yahoo as well as several other web companies of click fraud.

Led by retailer Lane’s Gifts & Collectibles, the plaintiffs allege that they have been overpaying for advertising due to illegitimate hits on their links and banners and that search sites were aware of the problem but continued to overcharge them.

The suit names as defendants Google, Yahoo, Ask Jeeves, Time Warner (AOL), Walt Disney, Ask Jeeves, Daum Communications (Lycos), LookSmart and FindWhat.

Online merchants have quietly complained for some time that bogus click stats cost them tens of thousands of dollars each year, but fear of blacklisting by major search engines have prevented them from going public about the issue or pursuing compensation.

In March, CNet News ran a story about a Search Engine Strategies conference in which audience members sheepishly admitted to losing as much as $300,000 paying for thousands of clicks with almost no conversions.

“This fraud is part of doing business, because if you start suing these search engines, they'll cut off your traffic,” one audience member said.

With sponsored link fees running anywhere from 50 cents to $10 per click, analysts say the industry is ripe for fraud.

John Squire, product marketing vice president at web analytics firm Coremetrics, estimated that his company's clients, which include online merchants such as Eddie Bauer, OfficeMax and CompUSA, were spending about $10 million a year on fraudulent clicks.

“It's a billion-dollar problem,” said Tom McGovern, president of search engine Snap.com.

Click stats can be inflated in several ways, from simply clicking on the same ad or link repeatedly to using sophisticated bots to automate the clicking. A Wall Street Journal article on the subject said industry experts estimate that fraud is responsible for as much as 20 percent of all clicks.

In cases that have been successfully traced back to the source of the fraudulent activity, perpetrators are most often found to be either companies seeking to eat into a competitor’s pay-per-click ad budget or, less frequently, search engine ad affiliates hoping to boost their payout.

Either way, merchants end up paying more than they should, with little return on their investment. And now, they want search companies to be held liable for the fraudulent charges.

However, most search engines claim to have antifraud mechanisms in place and to issue refunds whenever they find evidence of artificially exaggerated click results.

None of the companies named as defendants in the suit have issued public comments, but AskJeeves stated in a public filing last month that it intends to defend the lawsuit vigorously.

Also, in a recent quarterly report, Google admitted that click fraud is a problem on the site but said it reimburses victims for lost revenues.

Copyright © 2026 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More News

BranditScan Rolls Out 2 New Platform Features

BranditScan has introduced its new Traffic Optimization and Doxing Protection features for creators.

NMG Management Partners With Cosplayground to Scale Distribution

NMG Management has partnered with Cosplayground to expand the studio’s digital distribution and licensing operations.

Dreamcam Rolls Out 'Voice Translator AI'

Dreamcam has introduced a Voice Translator AI to its livestreaming platform.

UK Government May Limit 'Step' Porn Ban With New Amendments

The U.K. Ministry of Justice on Friday revealed new government amendments to the pending Crime and Policing Bill, potentially limiting a pending ban on “step” content to apply only if adult performers role-play as minors.

Arizona Senate Removes 'Catch-22' Provision From Consent Bill

The Arizona State Senate has amended a bill that would impose new requirements for adult content uploaded online, removing a seemingly contradictory provision that could have effectively made it impossible for adult sites to operate in the state.

Climaxx Media Launches Networking Platform

Climaxx Media has officially launched its new networking platform.

Italian Court in Aylo Case Limits International Reach of AV Rules

An Italian administrative court has ruled that Italy’s recently-enacted age verification rules for adult content may not currently be enforced against sites based in other EU member states, pending further procedural action under the EU’s Directive on Electronic Commerce.

OCC, FDIC Prohibit Use of 'Reputation Risk' by Regulators

The Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) on Tuesday issued a final rule codifying the elimination of ‘reputation risk’ as a criterion in their supervision of financial institutions.

Wisconsin Governor Vetoes Age Verification Bill

Gov. Tony Evers on Friday vetoed AB 105, an age verification bill that would have allowed anyone to sue adult content providers for damages over alleged failure to age-verify users in Wisconsin, with penalties of up to $10,000 per violation.

FSC Releases Statement on Wisconsin Governor Vetoing AV Bill

The Free Speech Coalition has released a statement on Wisconsin Governor Tony Evers' veto of the state's age verification legislation.

Show More