Google Settles Click Fraud Suit

NEW YORK The search marketing industry now has 90 million reasons to take click fraud more seriously.

In what may set an ominous precedent for the lavishly praised search advertising marketplace, Google has agreed to settle a lawsuit with an Arkansas company by awarding $90 million worth of advertising credit for any and all marketers who can claim they have been subject to click fraud.

In a posting on Google’s official blog late Wednesday, the company said, “We’ve been discussing the case with the plaintiffs for some time and have recently come to an agreement with them which we believe is a good outcome for everyone involved.”

That agreement potentially settles the lawsuit brought by Arkansas company Lane’s Gifts and Collectibles—as well as, Google hopes, any looming disagreements it has with other advertisers. Normally Google allows its advertisers 60 days in which to apply for reimbursement from any invalid clicks. But as a result of the suit, all of the company’s advertisers from 2002 to the present are now eligible to receive ad credits up to $90 million.

The term “click fraud” generally refers to two forms of nefarious Web activity: either rival companies deliberately clicking on their competitors paid search advertisements in order to drive up pricing and/or exhaust their competitors’ budgets, or B-grade or bogus publishers deceitfully clicking ads on their own sites to drive up the revenue they are paid by Google. For Lane’s Gifts, the dispute concerned clicks on the company’s paid search ads that ran on Google and were deemed fraudulent.

While some in the search industry have attempted to draw attention to the phenomenon, the major search vendors like Google and Yahoo have been telling everyone who will listen that click fraud is under control. Now with Google settling, the search giant appears to be publicly acknowledging the extent of the problem while also opening itself up to future lawsuits.

In its blog, Google attempted to play down the settlement’s significance. “We have said for some time that we believe we manage the problem of invalid clicks very well,” the company wrote. “We have a large team of expert engineers and analysts devoted to it. By far, most invalid clicks are caught by our automatic filters and discarded before they reach an advertiser’s bill.”

The settlement with the Arkansas company is still subject to approval by the judge reviewing the case.