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PayPerClick Class Action Law Suit
Internet Firms Face Legal Test on Advertising Fees
Brett_Tabke




msg:1228471
 4:34 pm on Apr 5, 2005 (gmt 0)

Excite [money.excite.com] is reporting on a Wall Street Journal story that:

[electricnews.net...]

A group of advertisers quietly filed a lawsuit in February against Google Inc. (GOOG), Yahoo Inc. (YHOO) and other Internet companies in a potentially important legal test of those companies' liability for a form of online-advertising fraud, Tuesday's Wall Street Journal reported.

 

mayor




msg:1228472
 4:44 pm on Apr 5, 2005 (gmt 0)

Can't imagine this one having real merit. Google and other search engines are not the fraudsters, and from what I can see they've taken reasonable action to protect against it.

If you buy a bushel of corn and there's a few worms in there do you sue the farmer?

kapow




msg:1228473
 4:46 pm on Apr 5, 2005 (gmt 0)

They allege that the defendants, which include Google, Yahoo, FindWhat, Ask Jeeves, America Online and Look Smart, improperly charged advertisers for what they refer to as incidents of "click fraud."

...some advertisers to worry the problem is bigger than they are being told

EXCELLENT! At last! (although I doubt the true scale of this will see the light of day).

WebGuerrilla




msg:1228474
 5:08 pm on Apr 5, 2005 (gmt 0)

from what I can see they've taken reasonable action to protect against it.

If you think they've taken reasonable action to catch click fraud, then you haven't spent much time investigating their systems. They are a complete joke. We built a click tool and ran it against our own listings to see how well they were protecting us.

The amount of clicks that got through were pathetic. Even when we would do ridiculous things like hammer a single $.10 term that normally only gets a couple of searches a week.

The burden to police fradulent activity should not be the responsibility of the advertiser. I hope they get hammered.

StupidScript




msg:1228475
 5:14 pm on Apr 5, 2005 (gmt 0)

Two things:

1) Why file "quietly"? The evidence of the sheer number of advertisers who believe they have been victimized should count for something. Pluss, more log files equals more click fraud evidence, should it exist ... but see #2 ...

2)
I doubt the true scale of this will see the light of day

In our internal investigations we have seen a pretty consistent click fraud rate of somewhere around 25% ... HOWEVER, comparing our figures to our bills from GOOG and YHOO, we see that they have effectively kept all but about 1% or so from impacting our advertising spend.

WebGuerrilla, the clicks definitely do make it through ... but are you being charged for it? See, without a clickthrough, there's no click fraud. The correction happens during the part of the cycle where the click is counted against your bill, not before it makes a request from your server. You've got to compare the data you have with the data coming frlom the engines.

As long as they are being that effective, I don't mind not seeing the true scale of the click fraud problem.

The problem was huge before G and Y put up their analysis programs, but it's a non-starter, now.

I do agree that this case has teeny-weeny legs, and that it's not likely to succeed, as the companies being sued are definitely taking a proactive stance, and are having a good bit of success battling the problem.

The lawsuits should be brought against the individuals and groups involved in perpetrating the fraud.

Brett_Tabke




msg:1228476
 5:18 pm on Apr 5, 2005 (gmt 0)

> If you buy a bushel of corn and there's
> a few worms in there do you sue the

If you have sold it as worm free grade A corn - yes you can. This sort of thing happens all the time in the corn industry with genetically modified seed.

Like WG said, they may have systems in place, but it is a leaky at best and only catching the worst cases. Click Bots are childs play to program.

I'm not without some empathy for the engines because policing the net with its dynamic ip capability is not going to be full proof. There is simply no system that would work 100% of the time given the current net structure.

StupidScript




msg:1228477
 5:25 pm on Apr 5, 2005 (gmt 0)

There is simply no system that would work 100% of the time given the current net structure.

This is absolutely true, as anyone who has attempted to figure out which clicks are fraudulent could tell you. Combinations of programmatic filtering and human oversight do a pretty good job of identifying what may be click fraud, but even then there is a lot of room for judgement calls and errors.

kapow




msg:1228478
 6:25 pm on Apr 5, 2005 (gmt 0)

Like is already happening on this thread, it will get explained away, doubted into non-existance, and the advertisers will continue to pay for their competitors clickbots and click-armies in 3rd world countries.

tedster




msg:1228479
 7:19 pm on Apr 5, 2005 (gmt 0)

Funny thing, back when there was only GoTo, who then became Overture, I thought that the fraud protection was much stronger. OV would regularly issue me refunds for activity that I had only begun to question in-house and not yet reported. Now I see much more trouble on a regular basis and have to work to stay on top of it - and I don't have very big accounts to monitor.

incrediBILL




msg:1228480
 7:40 pm on Apr 5, 2005 (gmt 0)

This lawsuit is about as idiotic as filing a class action against auto manufacturers because your cars are getting stolen.

The only benefit might be that Google/Yahoo/etc. step up the game and provide better tools to detect and block fraud for the advertisers in real time.

ShantiShunn




msg:1228481
 9:27 pm on Apr 5, 2005 (gmt 0)

I agree with incrediBill on this one.

1) I don't see the case getting anywhere and definitely not getting money from G & Y.

2) I do see it being a catalyst for good overall as I think it will make them crack down even more in the way they audit their click-thrus.

Personal note: I think click fraud is a definite problem. I have had many campaigns of all sizes that I had to drop words due to sudden click explosions with no conversion. It has been happening since the GoTo days, and has been steadily getting worse over the last 6 years, but now it is finally hitting the front pages.

I hope something does get worked out soon in terms of true systems setup to monitor this type of thing, but just like the spyware industry, unscrupulous individuals and companies will always find a way to do it, and the monitoring needs to be constantly re-engineered.

That's my $0.02.

StupidScript




msg:1228482
 9:55 pm on Apr 5, 2005 (gmt 0)

I'm curious how many of you have click fraud evidence, approximately what percentage of your spend does it take up, and how do your inhouse figures compare to G or Y's reports?

I do acknowledge that click fraud is a real thing, and that many clickers are engaged in it, but seriously, have you sat down and compared what you are being billed for and what you detect inhouse?

I'm honestly saying that (a) click fraud is being handled well by G and Y and that (b) our recurring weekly investigations support that. Really.

Those who say G and Y are not handling it well: How do you support that?

HughMungus




msg:1228483
 10:14 pm on Apr 5, 2005 (gmt 0)

This lawsuit is about as idiotic as filing a class action against auto manufacturers because your cars are getting stolen.

Bad analogy. The auto makers aren't profiting from cars being stolen. The lawsuit is basically saying that the companies running the PPC programs are not doing enough to prevent click fraud.

glitterball




msg:1228484
 10:18 pm on Apr 5, 2005 (gmt 0)

The only analogy that I can think of is with the Banks profiting from Credit Card fraud.

Has anyone ever successfully sued a Bank for being charged commission on fraudulent Credit Card transactions?

amznVibe




msg:1228485
 10:42 pm on Apr 5, 2005 (gmt 0)

The biggest problem with any class action lawsuit is that the only people that walk away with anything are the lawyers who make a fortune in billable hours. Every "award" turns out to be a joke, like a few dollars per person and nothing really changes in the end.

It's never a realistic solution to even more serious problems.

Visi




msg:1228486
 10:45 pm on Apr 5, 2005 (gmt 0)

Think it will be interesting to read defence filings on this one. Will Google and Yahoo open up their trade secrets or just pay to protect them? Smell an out of court settlement coming on this one.

np2003




msg:1228487
 11:03 pm on Apr 5, 2005 (gmt 0)

This is good that it's getting headlines which hopefully the people at GOOG and Yahoo pick up and address asap, we spend 5 figures on Adwords each month and we're really appalled by click fraud. It's an absolutely enormous issue that Google and Overture fail to address because its earning them extra $$$. Sure, I can don't mind now because it's still converting me, but sooner or later I'll move on. (Yes results are getting worser and worser each day due to rising click frauds).

All I have to say is, it might give them extra $$ in their pocket now, but once sellers get bad ROI they'll leave and never return.

What's bad is *EVERYTIME* I open a support ticket and ask Google to investigate a fraud incident, they end up refudning me hundreds of dollars, but if I don't open a ticket they keep quiet? Maybe I should open a ticket *every* single day..

internetheaven




msg:1228488
 11:25 pm on Apr 5, 2005 (gmt 0)

1) Why file "quietly"?

Because if they make a big deal out of it then Google will have to fight it with everything they've got to avoid future similar lawsuits. If the lawsuit is never heard of then Google may just settle out of court to get a quick resolution (and save a shed load of money).

The only analogy that I can think of is with the Banks profiting from Credit Card fraud.

Just like the "car theft" analogy this one is not similar either. You know if someone else is using your card without your permission - you have no way of knowing whether a click is genuine or not so you're stuck with "taking Google's word for it".

StupidScript




msg:1228489
 11:29 pm on Apr 5, 2005 (gmt 0)

np2003, how do you document your click fraud reporting to Google? How does it compare to the clicks you see in the reports Google generates? Are you absolutely certain that Google isn't just capitulating because they don't have the man-hours available to track down every click fraud report?

I mean, if you record 30 instances of clicks from the same IP address on the same term within X minutes, do you see exactly that in your regular Google reports? Or do you see 30 instances in your logs and Google reports 20, leading you to request refunds for the 10 missing fraud clicks? I bet you request a refund for all 30 clicks. ;)

I'm going to stand by my earlier statement that they are doing a good job of filtering fraudulent clicks out before the bill gets to you, AND to reiterate that no system could ever track 100% of all fraudulent clicks. np2003, your tracking may simply be supplementing the work Google is doing, filling in the gaps so you get refunds for most of the fraud.

If that is so, then I again stand by my statement that programmatic filtering PLUS human oversight is relatively reliable, and that you are adding the human element that Google simply cannot include, so you may be catching more fraud than Google's programmatic approach alone can possibly catch.

I wanted to add that, in the early days of click fraud before G and Y started trying to deal with it, our company used to submit click fraud reports and requests for refunds every day, as we had an employee whose only job it was to seek out click fraud evidence and package it for reporting. Our competition forces us into the $10-$80 CPC range. Our average refund in those days was around $400/day out of a $45,000 monthly spend. Now, we can barely find $20 worth of fraud each WEEK. That's a massive improvement, and the reason why I'm sticking on G's side in this discussion.

incrediBILL




msg:1228490
 11:53 pm on Apr 5, 2005 (gmt 0)

Bad analogy. The auto makers aren't profiting from cars being stolen

WRONG! they sell replacement cars and we consumers pay for it in the end with ever increasing auto insurance

Seems to me a very similar vicious cycle that needs to be broken.

Honestly, I'm not sure you can ever totally prevent all click fraud especially when services like AOL reuse the same IPs all day long and tend to rotate them from an IP pool with a frequency of 5-15 minutes.

walkman




msg:1228491
 12:28 am on Apr 6, 2005 (gmt 0)

"This lawsuit is about as idiotic as filing a class action against auto manufacturers because your cars are getting stolen."

Not really Bill. It's more like if it's stolen from a parking lot that has some (at least implied) responsibilty to protect your car. I think they'lll have a hard time proving fraud though, you need to show real damages, not guess.

Google is making money from the fraud too so it's even worst. If the parking lot owner got a cut of the chop-shop's net, they'd be in even more trouble.

incrediBILL




msg:1228492
 12:41 am on Apr 6, 2005 (gmt 0)

Google is making money from the fraud too so it's even worst.

But the problem here is pinpointing what is fraud and what isn't fraud, and that's the real problem.

Obviously 100 clicks from a single IP address in an hour or a day or even over a month are suspicious. However, how does Google or anyone else detect a network of seemingly unrelated IPs or proxies making a bunch of malicious clicks that are too subtle to track? Even spammers have taken to sending a little spam from a bazillion addresses (instead of one mega-spam blast from one IP like back in the old days) just to make it next to impossible to lock them out.

You have to prove pattern and intent to prove it's fraud, otherwise it's just a high traffic ad, maybe overhyped in it's advertising, taking the wrong people to the wrong page with poor ROI.

Who draws the distinction of whether:

- the ad targets the wrong people, gets good CTR but bad ROI dragging in the wrong crowd

- the ad gets good CTR but the product just stinks so no ROI as nobody will purchase

- the ad is getting fraud clicks

It's a very slippery slope where any whining MLMer can supposedly make a claim of fraud just because none of the 10,000 clicks he paid for wanted to be the next tier in his pyramid - WAH!

janethuggard




msg:1228493
 12:54 am on Apr 6, 2005 (gmt 0)

There is no way to protect against click fraud, nothing at all Google or any other company can do to prevent it.

Any 12 year old child, who gave it any amount of thought, was so ever, could rack up $1,000 a day in Adsense revenue, without any way at all of being tracked down by the ad server or the Adwords client raw logs. No webmaster could detect it.

Given that fact, and it is a fact, the only thing prudent is to use verified trust. You trust the system, but verify. When you can track it down, you report it. But, I say again, if I wanted to, I could make an undetected fortune off of Adsense, at the expense of Adwords advertisers. Would it be fraud? Yes. Could it be proven? No. Not on their best day, and I'm not a rocket scientist. So, if I have figured out, how many others with less ethics have too, given how many sharpers knives there are in the rack, at WW alone? If I could do it (haven't, wouldn't) anyone could.

It is naive for these plaintiffs to think there is anything the ad server could do. My advice to them would be if you don't trust the system, don't use it.
Because it is impossible to create an ad server system that could not be broken, with minimal intelligence, undetected.

walkman




msg:1228494
 2:00 am on Apr 6, 2005 (gmt 0)

"But the problem here is pinpointing what is fraud and what isn't fraud, and that's the real problem."

lawyers don't care. Google execs are on th erecord saying that fraud exists and lawyers will ask for G's documents on that. Plus they are probably testing fraud on several sites as we speak. This is mostly to make Google settle, and they will because they have no choice.

GameMasterM




msg:1228495
 2:36 am on Apr 6, 2005 (gmt 0)

Plaintiff will have to prove intent. The SEs will roll out their detection software and say they are working on the problem. Plaintiff will be entitled to actual losses. Lawyers take 1/2 so guess who wins?

incrediBILL




msg:1228496
 3:29 am on Apr 6, 2005 (gmt 0)

Google execs are on the record saying that fraud exists

So is Overture, eBay, Visa, Mastercard, the POLICE, the FBI, the point was what?

Google isn't the criminal here, they admitted that criminals were taking advantage of their advertisers, that in itself isn't an admission of any wrongdoing but that a problem exists only because of a criminal element in action and they are making efforts to thwart it.

Personally, I hope they swat those slimey lawyers like the ambulance chasing bugs they are.

janethuggard




msg:1228497
 3:40 am on Apr 6, 2005 (gmt 0)

I can tell you while google may settle, if the plaintiffs knew the extent of the possible fraud, they will get enough to bring Google and the rest to their knees. If Google et all have no idea that this single loophole in the system could be happening, they are naive. I don't think any court, jury, will believe for a second that they are that naive.

All they need is proof that Google 'should' have known, using prudent models, that it could have happened, and did nothing to protect the advertisers. I know for a fact they have done nothing. If they had, I would have known it by now. I spend my days and nights doing research, seven days a week, and that kind of information, I would have seen. I haven't. If I know about it, how convincing would it be for them to say they had no idea it could be happening?

Fact is, if it comes out, the probably only majorloop hole in their system, the one that can not be plugged, and the numbers were crunched as to how deep the fraud could be on an annual basis, they would have to shut down those ads servers.

It was that conclusion, that lead me to not publish the paper on the topic, after my research proved 100% there was such a loophole. When I realized the full extend of the problem, it seemed like a good idea to publish an article on the loophole ... until I thought about the criminal minds out there, and the billions it could cost the ad severs, and even cost little old me in Adsense revenues. So, I shelved it.

I see potentially billions of dollars in fraud, each year,if the wrong minds figure it out. (maybe they already have) With no way to detect it, how could anyone say that it is not happening, in the millions now, and growing? We can't.

However,understanding how it could be done, could provide information that would help them restructure the internet so it was not possible...but we are talking time...perhaps a year or more. Time they would all be shut down, and losing huge revenues. We are not talking engineers tweeking things here, we are talking social restructure of a large portion of the web, and I only see one of the defendants are anywhere near capable of doing what is required to plug that loophole in any reasonable time frame... and that would be giving even them, alot of credit.

The implications of this all, is mind boggling. A huge revenue stream could be shut down not just for the defendants, but all us Adsense publishers as well,just from one class action law suit.

walkman




msg:1228498
 4:13 am on Apr 6, 2005 (gmt 0)

Overture will get sued too, dont; worry.
Visa and MC will not hold you accountable, they will reimburse you.
Police and FBI have nothing to with this, you can't sue them.

The point is that people are getting robbed. Whether is 5%, 10% or 20%, people are losing money. It is not a joke. It's like someone taking 10% out of your paycheck. How would you feel?

The question will be whether Google is doing "enough" to combat fraud and reimburse people. Good luck trying to figure that one out, but it is legitimate question. Maybe if they took 20 PHDs from something else and put them on Adwords, things would be better. Who knows? The problem with Google is that the more publicity this lawsuit gets, the worse it is because it's only source of income is under attack.

Hate the lawyers all you want, but if it wasn't for the class action ones, people who lose $1000 or so would never get the chance to sue; Google would bury them with high powered lawyers. Google is not the criminal, but they are ultimately at fault, it's happening on their network. if people keep getting robbed or stabbed on the subway, and MTA doesn't increase security, they will get sued.

-------------
So is Overture, eBay, Visa, Mastercard, the POLICE, the FBI, the point was what?

Google isn't the criminal here, they admitted that criminals were taking advantage of their advertisers, that in itself isn't an admission of any wrongdoing but that a problem exists only because of a criminal element in action and they are making efforts to thwart it.

incrediBILL




msg:1228499
 4:45 am on Apr 6, 2005 (gmt 0)

Overture will get sued too, dont; worry.
Visa and MC will not hold you accountable, they will reimburse you.
Police and FBI have nothing to with this, you can't sue them.

Excuse me but Overture and Google seem to reimburse what they can detect and what is reported. There has to be some level of culpability and unless there is some smoking gun we're unaware of, like what happened in the tobacco industry hiding things, I don't see Google having a huge issue.

At some level this is the genius of AdBrite (yes pud, I'm giving you props) in that they only sell ads based on a time frame (day/week/month) or CPM, which makes the CTR fraud at that level irrelevent. The only problem is CPM could be defrauded but not quite as dramatically as CPC with less effort.

MarkHutch




msg:1228500
 5:00 am on Apr 6, 2005 (gmt 0)

I've made pretty good money via PPC and I'm sure other here have done so as well. I hope in the future these companies will be more open about their practices. I really believe Google is trying it's best to keep everything on the up and up. The others I am less sure of.

There will be more lawsuits and possibly new laws unless all of these companies are more open with their customers about how and why they do things. Now that Google is a public company, shareholders and federal regulators are going to demand it and I think that's a good thing. These secrets lead to all kinds of speculation as to what is really going on. Everywhere in business EXCEPT Internet companies these ideas are patented for protection and then published or sold. Sooner or later the Internet is going to have to follow the same rules as everyone else in the business world.

This 68 message thread spans 3 pages: 68 ( [1] 2 3 > >
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