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Google Faces Click Fraud Charges

Google Faces Click Fraud Charges
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Jul 5, 2005 3:08 PM PDT    Text size: 
MOUNTAIN VIEW, Calif.—Dominant search engine Google has been sued in federal court for failing to prevent click fraud in its AdWords and AdSense programs.

The complaint, which has the potential to become a class action suit on behalf of all Google’s advertisers since 2000, maintains that the search giant has not done enough to fight click fraud, which results in increased costs for advertisers as well as increased revenue for Google.

In addition, the suit requests that Google open its records for third-party auditing.

The plaintiff, Colorado pay-per-click tracker Click Defense, estimates that between 20 and 38 percent of all advertising click-throughs are fraudulent.

"[Advertisers’] payments average approximately 50 cents per click, but can reach over $100 for sought-after items valuable to advertisers," the complaint states. Click Defense says that click fraud can be committed by a business that repeatedly clicks on the AdSense listing of a rival, driving up the cost of its rival’s advertising bills.

“We believe this suit is without merit, and we will defend ourselves against it vigorously,” said Google spokesman Mike Mayzel.

Google watchers believe that Click Defense is using the suit as a gambit to peek inside Google’s operations, and the $10 million sought in damages for negligence and breach of contract is a red herring.

Inside Google’s Nathan Weinberg said, “What I don’t understand is why a company that profits from fighting click fraud [Click Defense] would sue a company for not making them unnecessary.”

Weinberg concluded the suit was a canny move. “It seems only obvious that this suit is meant to drum up more clients for Click Defense,” he said.

Google and rival Yahoo were also sued in April for lack of click-fraud vigilance. Arkansas-based lawyers for the case set up a website, LostClicks.com, to solicit additional plaintiffs in a class action suit.

Click Defense CEO Scott Boyenger said that Google was not on trial for committing click fraud itself, “[but they are] intentionally vague in describing exactly what steps are being taken.”

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