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Google Sued Over Click-Fraud Issue

Click Defense Inc. claims in its class-action lawsuit filed against Google late last week that the search engine has cost its advertisers at least $5 million by not preventing click fraud.

“Google has failed to take any significant measures to track or prevent click fraud, and fails to adequately warn its existing and potential customers about the existence of click fraud,” stated the complaint filed June 24 in U.S. District Court in San Jose, CA.

Click Defense, Fort Collins, CO, a click-fraud prevention and advertising technology firm, claims in the lawsuit that click fraud on Google accounts for as much as 38 percent of clicks. Other experts estimate that Internet click fraud accounts for 5 percent to 20 percent of all clicks.

“Google knows … that click fraud is rampant in its AdWords program, and that the advertisements it sold and sells to plaintiff and the class are worth significantly less than the amount which plaintiff and the class have bid for key words,” the complaint states.

Google spokesperson Mike Mayzel would not answer specific questions regarding the lawsuit but he did say, “We believe the suit is without merit, and we will defend ourselves against it vigorously.”

Google chief financial officer George Reyes acknowledged the pervasiveness of the problem late last year, saying click fraud “threatens our business model” at an investors conference.

Click Defense is asking the court to determine whether Google's promotional materials for its AdWords program misrepresent and/or omit material facts about the pervasiveness of click fraud and whether it has properly “accounted for and refunded fees it has wrongfully collected from identified victims of click fraud.”

Click Defense CEO Scott Boyenger told DM News that his attorneys advised him not to comment on the suit.

Kevin Lee, chairman of search marketing firm Did-it.com, said that though Google is “clearly responsible” for policing click fraud on its network, it is “difficult to imagine that Google is not committed to reducing and eliminating click fraud, which ultimately reduces click prices due to poor conversion.”

Google's prevention or non-prevention of click fraud may be difficult to prove, Lee added.

“No one has fully defined when a click is 'fraudulent' versus simply a click from a poor quality source,” he said. “So it is difficult to know if the firm initiating the lawsuit … truly believes the fraud problem to be as big a deal as stated, or if they are just using the legal action for public relations.”

Christine Blank covers online marketing and advertising, including e-mail marketing and paid search, for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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