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Google Sued For Click Fraud

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  • #589111
    Anonymous
    Inactive

    Google Sued For Click Fraud
    Author: Jason L. Miller

    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.

    About the Author:
    Jason L. Miller is a staff writer for WebProNews covering technology and business.

    #667916
    vladcizsol
    Member

    Good catch!

    Yes, we all know how costly click fraud is at PPC engines. I think the estimate of 38% for Google Adwords is accurate, a similar number occurs via overture. And those two engines have the BEST fraud prvention measures in place.

    Findwhat is probably closer to 90% fraudulent traffic. Smaller engines like looksmart, epilot, kanoodle and Enhance seem to average 99% fraudulent traffic.

    IMO spending money on anyone other then Google or Overture is a Total waste of money.

    #667926
    Anonymous
    Inactive
    Professor wrote:
    IMO spending money on anyone other then Google or Overture is a Total waste of money.

    Whereas spending money on Google or Overture is only a 38% waste of money :D

    Albeit the plaintiff sounds suspect, they are right in that Google and Overture benefit from click-fraud.

    IMHO, the whole “partner program” (adsense) is badly flawed in this respect and shouldn’t really be allowed in the real world until such a flaw is overcome. I recently pulled all my PPC campaigns, for this reason and also to avoid scraper sites. Another major “flaw” that is eating away at Google’s heart.

    I find it both amusing and frustrating that Google risk their SERPS, the foundation of their business, by unleashing Adsense. Adsense encourages SPAM, encourages Click Fraud. Google aren’t fighting anyone but themselves!

    #693763
    Anonymous
    Inactive

    From – WebProNews

    Tuesday Apr 04, 2006

    Yahoo Implicated In Spyware Click Fraud

    Advertisers who expect their Overture ad campaigns to run with certain Yahoo Searches may be surprised to find their ads running in syndicated spyware applications that render each impression as an ad click the advertiser must pay.


    Editor’s Note: Ben Edelman has again made some damning claims about Yahoo and its relationship with spyware vendors. Have your Overture campaigns seen behavior that looks like click fraud? Tell us more at WebProWorld.



    When that click is paid, according to spyware researcher Ben Edelman, Yahoo and the spyware vendor split the revenue. Edelman has followed up his August 2005 research into spyware receiving payments from Yahoo’s Overture by noting an increase in this possible syndication fraud.

    “In my August syndication fraud examples, an advertiser only pays Yahoo if a user clicks the advertiser’s ad. Not so for three of today’s examples. Here, spyware completely fakes a click — causing Yahoo to charge an advertiser a “pay-per-click” fee, even though no user actually clicked on any pay-per-click link. This is “click fraud,” Edelman wrote.

    Edelman documented three examples where actual click fraud took place. He named 180solutions, Nbcsearch, and Look2me/Ad-w-a-r-e as culprits in presenting popup ads that defrauded advertisers with Yahoo.

    “Spyware syndication falls within the general problem of syndication-based click fraud. Suppose X, the Yahoo partner site, hires a spyware vendor to send users to its site and to make it appear as if those users clicked X’s Yahoo ads. Then advertisers will pay Yahoo, and Yahoo will pay X, even though users never actually clicked the ads,” said Edelman.

    His examples of this click fraud are not guesswork and assumptions. For each case, Edelman provided a full packet log, annontated screenshots, and video of the spyware-based click fraud taking place.

    A fourth example of nefarious practices taking place involves the practice of inserting pay-per-click links into text without the consent of the publisher. Edelman displayed one example of this, a story about Iraq from the New York Times website that had a third-party link inserted.

    Edelman believes that Overture is the sole funding source for Qklinkserver.com, which inserted the link. He diagrammed the process that took place with this insertion:

    (T)he net effect of these practices is that advertisers pay Yahoo, then Yahoo pays Intermix (Sirsearch), then Intermix pays Searchdistribution.net which pays Qklinkserver.com / Srch-results.com.

    Intermix, the parent of MySpace, is now owned by News Corp. Intermix has been implicated in spyware schemes in the past, when the company was investigated by New York Attorney General Eliot Spitzer’s office before News Corp purchased it.

    While News Corp has been publicly cleaning up MySpace, it may need to take a harder look at some of Intermix’s other businesses. And Yahoo should be doing these types of audits itself, instead of waiting for Edelman or someone else to do them before correcting a problem.

    #693766
    Anonymous
    Inactive

    Ben Edelman rocks!

    He consistently brings us most interesting research results.

    Thank you, Ben!

    Your site is invaluable.

    http://www.benedelman.org/

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