PayPerClick Class Action Law Suit

Internet Firms Face Legal Test on Advertising Fees

[Brett_Tabke]

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.

[samwise]

My experience has been that there is a lot of click fraud going on. I have a forum of which there are some very problematic people/machines that sign up anywhere from 3 to 30 times a day. All from different IPs and email addresses. I can tell it's from the same people/machine because they don't ever post anything. This happens all the time.

Apply that to clicking on ads

I've signed up with a click fraud program and found out a lot of things most of which are not good. From what I can see is they don't click on your ad 5 times or even 2 times in a row but rather just once a day, every day or two or three. They'll click on a few of your ads one day and then rotate clicking different ads. None of which even amount to anything. My raw logs say they don't even stay long enough for the page to load let alone read anything. I've had adword ads displayed on the third page (google search) and get clicked by the same IP addresses. This means they have to go look for my ads. This isn't "Organic" and hasn't amounted to very many sales. I think some clicks are from competitors and others from?

If the fraudsters can change their IP address this fast I don't see how anyone/computer can tell them apart from a real person who is interested in the ad content etc... Google and Overture have refuned some of my money but there is still click fraud.

[Voxman]

IMO, conversions will be the future. We see first Pay-per-Sale sponsored search companies and both Google and Overture are heading that way, with transparent cost-per-conversion directly in your account. Charging for the conversions instead of the click is not such a big step. That´s the future, I think, making click fraud a thing of the past.

Really like this idea of making the PPC engines affiliates in a sense.

I see the board is split, mostly with the advertisers complaining bout our budgets being drained while ROI keeps plumenting and the Adsense publishers who only care about their Adsense checks.

For me the SE lost it when they opened the doors to just anyone as so called partners. Most of them are simply spamming the engines with mini searches with the results.

This will come to an end.... how remains to be seen

[phara0h]

With all the people from Webmasterworld creating test sites for "Mesothelioma Cancer Patients Attorneys" Google Ads and jumping to a different computer, clicking an add and running off with $100 from a "lawyer." I'm not surprised Google's getting sued! lol

[bigjohnt]

Click fraud is a cost of doing business, just like shoplifting, or shrinkage due to shelf rot.

Both G and O have been good to me with frequent refunds without even my notifying them. Other vendors not so good. LS REALLY bad. (4000 clicks.. mere hours after the auto-funding is complete, draining the account? Every month? Amazing, they must have more traffic than G, Y, MSN, and O at 2amEST. And We got all of it.)

The issue is, if the PPC vendor is really bad at fraud protection, the MARKET will sort it out. If you get a BAD ROI from a certain vendor, you drop the vendor. Caveat emptor - let the buyer beware.

If the PPC vendor has a strong interest in the long term viability of their own companies it would behoove them not to allow short term profits from click fraudsters. If they have a short term need for cash, in survival mode, some vendors might relax their standards and protections. And lose customers and market share. This is free enterprise. Just like MS*ft and their security issues. If it gets THAT bad, they lose market.

I imagine click fraud protection through third and fourth level partners is quite difficult. I know of two PPC vendors who had dismal fraud protection (we were getting tons of 3am EST traffic from Uraguay and Argentina for a site selling only to US citizens. They refunded money, and eventually traced the third level party and dropped them.

I estimate 10 - 15% of budget will go to fraud. Just like the farmer that plants a bit more, knowing the mice, deer, raccoons and other vermin will get some of it, its figured in.

Fraud is crime, and failure to prevent a crime is unfortunate, but it is not a crime unless it is KNOWINGLY allowed or condoned.

Personally, I am more concerned about SERP scrapers that attack my money words, send up a page, and the user clicks Adwords to go to my site. Now, THAT is something bordering on collusion. Perhaps a class action suit from advertisers on that topic - which can much more easily be policed - is in order?

[ole1kanobe]

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.

I wouldn’t be so sure.
It kinda reminds me of an oasis recall on a vehicle. An oasis recall is treated like this: if the customer explicitly asks for the issue to be fixed, their warranty will cover the costs; but if the customer has no idea about the recall, then the dealership does absolutely nothing about the problem and not informing the customer about the problem until the coverage period has expired.
Take the latest big recall from Ford with their cruise control switches causing vehicles to go up in flames. If the media wouldn’t have broadcasted it across the US, odds are that Ford would have done an oasis recall on it, but as soon as people lost their homes or vehicles, all of the sudden it is an ‘important’ recall?
Just because someone/company takes ‘reasonable’ action to protect against a known problem doesn’t shelter them from responsibility/liability. Look at the whole Firestone/Ford tire problem that happened a few years back, not only did neither company think they should have to replace the faulty tires, they couldn’t even figure out who was actually liable for the damages.
The entire PPC idea was flawed at conception (IMO), it was a great marketing idea/gimmick that was full of holes from the word go. With so many people having access to the internet these days, anything that gets put out there is going to be hacked/reverse engineered by someone to find the exploits in it, i.e. any version of Windows ever available to the public. Until the day that company’s are held solely responsible for their products and not allowed to have some generic disclaimer that states “we provide this as-is and if it doesn’t work or gets compromised, TS and you will just have to deal with it” releasing them from all liability, this issue is going to continue, regardless of the product/service.
It’s kinda like years ago when you could buy something (just about anything) from a store and throw the receipt in the trash; you didn’t have to worry about the item not working or ‘going out’, things were made to last and were of high quality. With the flooding of the market place with mass amounts of products using cheap manufacturing processes and even cheaper labor, products today are mostly crap right out of the box. I think that technology has gone down that exact same path and will continue until a large entity like the federal government reins these companies in and holds them accountable for their products/services. Especially since many services offered are dealing directly with people’s money. Would people tolerate an online banking service that was full of security holes possibly allowing unauthorized access to their accounts? Of course not, the whole PPC isn’t really much different if you break it down to its simplest fundamentals.

But that’s just my take on it…

[Tapolyai]

The reason this was done in "quiet", is to set precedence.

The legal team is trying to cover both ends. If they fail, and is kept quiet, the plaintiffs are not damaged (a la SCO).

If they win, they will be able to point to it, in a much more public lawsuit.

[gregbo]

My general opinion since PPC advertising began is that it is a poor business model because it is very susceptible to fraud. I think most people who have an understanding of how Internet protocols and infrastructure work are aware of this. This fact may have a bearing on the lawsuit. I don't think the search engines are guilty of collusion, but I think the arguments about the extent to which many, perhaps most customers are entitled to refunds are justified. Given that the risk of fraud was well-known among the Internet technical community, the plaintiffs could argue that many, perhaps most of the search engines' customers deserve some sort of refund. How often do search engines issue refunds to those who do not complain about fraud? When were the first refunds issued?

[Reid]

Sometimes the lawyers file the lawsuit because they know the company is vulnerable and will settle out of court. Theyre probably counting on it.
A few quick ambulance chasing bucks and a set-up for the next lawsuit. They're probably trying to set a precedent for the amount of out of court settlement this is worth and then they will go fishing for more clients and do it all again.