Search engine powerhouse Google is being sued by a maker of anti-click fraud software for alleged negligence in failing to prevent click fraud in its search marketing business.
Colorado-based Click Defense alleges that Google has committed breach of contract, negligence, unjust enrichment and unfair business practices by not cracking down harder on click fraud—the illegitimate clicking on pay-per-click (PPC) Web ads. The lawsuit, filed June 24 in San Jose, CA, seeks class-action status.
Click fraud has gained prominence of late as a problem for many engines in the search marketing industry. It occurs when PPC ads are clicked by someone other than a real prospective customer for an advertiser’s product. The advertisers are then compelled to pay a fee both to the search engine serving the ad and the Web page operator that sold the ad space. While some amount of click fraud can be the result of competitors trying to drain an advertiser’s marketing budget, a much higher proportion—perhaps as much as 99%– is believed to come from the Web publishers themselves, often using automated click software known as “hitbots”.
In its suit, Click Defense charges that the rate of click fraud on Google’s AdWords PPC platform is as high as 38%, much higher than the 20% that many observers see as the search industry average. Click Defense alleges that Google fails to notify AdWords advertisers of the scope of click fraud because advertising income—including fees for those fraudulent clicks—makes up 99% of the company’s revenue. The suit says that Click Defense has itself been the victim of click fraud on Google’s AdWords program this year.
The negligence charge stems from Click Defense’s allegation that Google can effectively use the same technology that counts clicks on PPC ads to make sure that more of those clicks are not fraudulent.
Click Defense says in the lawsuit that damages to the class from Google click fraud would exceed $5 million.
Click Defense makes and sells software that advertisers can use to track down fraudulent clicks before apply for PPC refunds from search engines such as Google. Most PPC programs offer such refunds, but advertisers have for a long time complained that they are not accompanied by detailed information about how much click fraud occurred on their accounts, or where it originated.
A Google spokesperson told Reuters that the Click Defense suit is “without merit” and will be defended “vigorously.”
Google was one of a number of search engines named in a click fraud lawsuit filed in April in an Arkansas court by two small businesses. Other engines who are defendants in that suit include Yahoo, Lycos, Netscape, Ask Jeeves, FindWhat, and America Online as well as Time Warner. No decision has been handed down in that case, which may also seek class-action status.
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