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Lawsuit Filed Against Google for 'click fraud' on Google Adwords

Click Defense, Inc., filed a lawsuit against Google for alleged click fraud on Google Adwords on June 24, 2005. Click Defense claims Google failed to enact appropriate safeguards against fake clicks. As a result, the Plaintiff claims Google reaped unwarranted profits as a benefit of the scam. Click Defense seeks in excess of $5 million in damages.

Pay-Per Click Fraud

�Click fraud� has a unique meaning on the Internet and doesn�t meet the traditional definition of legal fraud. Instead, the term refers to the deliberate clicking of ads by people who have zero intent of buying anything from the site in question. Unethical companies have been known to hire individuals to site at computers and click the advertisements of competitors. Another method of click fraud involves creating programs known as �click robots� which search out and click certain ads. Both methods are a vicious means for destroying the advertising budget of a competitor.

Google has always claimed that it takes steps to stop click fraud, but many doubt it. Google is a publicly traded company and must show increasing profits to keep its stock price high. This simple fact creates a major conflict of interest for the company. The more clicks on Adwords, the more revenues are earned and the higher the stock price goes. Since click fraud results in income to Google, can it really argue that it is taking all possible steps to limit the fraud?

Fraud Percentages

Interestingly, not one of the major search engines has ever been willing to release click fraud percentage statistics. Advertisers have more or less assumed a click fraud percentage of roughly twenty percent, but nobody really knows. Click Defense, the Plaintiff in the lawsuit, is claiming a fraudulent clicking rate of 38 percent. Can you image wasting 38 percent of your advertising budget?

Inevitable Lawsuit

The lawsuit against Google was inevitable. Every site using Adwords is aware of the problem with click fraud. Frankly, it is a problem with every pay-per-click search engine. Many advertisers simply consider it a cost of doing business, but it is undoubtedly frustrating.

The real question is whether this lawsuit will force the search engines to clean up their act. Importantly, the discovery phase of the lawsuit will force Google to release its own internal numbers. Finally, online advertisers will know how much money they are wasting or will they?

If the click fraud percentages for Google Adwords are high, any interesting thing may occur. Google will not want such information released into the public forum. The only way to prevent that is to settle the lawsuit before it gets underway. If Google settles the lawsuit in the early stages, advertisers are going to have to take a serious look at the merits of their Adwords campaigns.

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