July 27, 2006 1:20 PM PDT

Google click fraud settlement given go-ahead

An Arkansas judge has given final approval to a $90 million settlement Google reached to settle a click fraud lawsuit, rejecting arguments by opposing attorneys that the amount was not adequate compensation for advertisers that had been charged for fraudulent clicks on online ads.

In an order signed Wednesday but released on Thursday, Miller County Circuit Court Judge Joe Griffin said he found that the settlement was "fair, reasonable and adequate," and overruled the objections.

"The court finds that approval of the stipulation and the proposed settlement embodied therein will result in substantial savings in time and resources to the court and the litigants, and will further the interests of justice," he wrote.

The ruling comes after an Internet marketing expert submitted an independent report concluding that Google's efforts against click fraud on its pay-per-click ad system were "reasonable." Alexander Tuzhilin, a professor of information systems at New York University, filed his report in a court in Arkansas last Friday. A hearing on the case was held on Monday.

"We're pleased Judge Griffin has affirmed the settlement as appropriate and fair to advertisers," said Nicole Wong, associate general counsel at Google. "We look forward to continuing to manage invalid clicks effectively and provide our advertisers with an outstanding return on their investment."

Attorneys for the original plaintiffs did not return calls seeking comment. An attorney who was challenging the settlement, who is involved in other click fraud litigation against Google, said he was disappointed with the ruling, but not surprised.

"We plan to file an appeal and continue to object to this settlement," said Brian Kabateck. As of July 19, about 7,000 claims had been filed for a total of $250,000 to be paid to claimants, he said.

Click fraud typically occurs when Web site publishers click on ads on their site to boost their own revenue or when companies click on rivals' ads in an effort to deplete their advertising budgets and acquire the keywords themselves.

The Arkansas litigation started when Lane's Gifts & Collectibles and Caulfield Investigations sued Google and other search engines in February 2005, accusing them of charging advertisers for clicks on online advertisements that were fraudulent or done in bad faith.

Under filed a challenge to the settlement in May, saying affected advertisers deserved more than a half of a percent on their losses and should be paid in cash, not credit.

The settlement doesn't mean that the problem of click fraud will go away, some experts have said, and there have been calls for an independent auditor to monitor click fraud at all the major search engines. The Search Engine Marketing Professional Organization has teamed up with Fair Isaac, an independent company that tracks credit card fraud, to measure the true size of click fraud and its effects on the search engine advertising industry.

Industry estimates of the click fraud rate range from about 14 percent to as high as 30 percent, but true figures have been difficult to reach because Google and other search engines have refused to provide click fraud data, citing competitive reasons. Search engines, meanwhile, have complained that third-party providers of anti-click fraud services and software inflate the rates to drum up business.

On Tuesday, Google announced enhancements to its AdWords system that will enable advertisers to see the number of invalid clicks on their purchased keywords and the percentage of the total those represent.

Meanwhile, a hearing in federal court in San Jose, Calif., was scheduled for Thursday morning on a proposed settlement in a separate click fraud lawsuit involving Yahoo.

The settlement between Yahoo and Checkmate Strategic Group, given preliminary court approval last month, provides for nearly $5 million in attorneys fees to be paid by Yahoo, one-sixth the amount Google has agreed to pay attorneys in the Arkansas settlement.

A group of plaintiff lawyers from the Arkansas lawsuit are contesting the Yahoo settlement, arguing that Yahoo was not mediating in the Arkansas lawsuit in good faith when it was settling the case in California. The Yahoo settlement would release the company from all similar click fraud claims against it in other actions, including the Arkansas litigation, according to paperwork Yahoo filed with the court.

Yahoo's settlement is better for affected advertisers because it would give full credits to them from 2004 to the present, company lawyers wrote in a motion to ask the California court to prevent the Arkansas court from interfering with the settlement.

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3 comments

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Google Paid Off Judge
Another typical Google failure. First they rip off
<a class="jive-link-external" href="http://www.techknowcafe.com/content/view/603/43/" target="_newWindow">http://www.techknowcafe.com/content/view/603/43/</a>
search engine technology and now they're ripping off advertisers. Fraud operation.
Posted by (156 comments )
Reply Link Flag
But the source of the Click fraud remains as before :(
What is the point of this order of this judge if the SOURCE of the problem is the same EXACT as before :( I mean the source of click fraud on Yahoo or Google is the Google AdSense
and equivalent on Yahoo. And they have not been changed at all! So what is the point
of this order of the judge if the SOURCE of the problem has not been addressed at all :(
So I tend to agree with the other post that the Judge has been paid off by Google.
Or someone high in Arkansas Government, to white wash this Billion dollar+ fraud of Google or Yahoo.

The only way around click fraud is a search engine that does not offer an incentive to fraudster
Web masters to engage in click fraud. That is why we have been using AnooX search engine:
www.anoox.com
and I have been recommending all who want to avoid click fraud to do same. Also since Anoox
is a "not-for-profit" the cost of PPC advertising through them is far lower than Google or Yahoo.
Posted by Sandra_Kerns (25 comments )
Reply Link Flag
The source of all problem is the PPC/Pay-per-click itself. We were not suppose to agree to the system
and pay method from the very beginning. It was planned back there by Google and Overture as scam.
In every other area where you advertise, lets say newspaper or TV commercial, you only pay for time and particular spot. Why web advertisement should be different. Because while promoting itself as very transparent and fair business, Google is lobbying with the Government to cover itself up. This creates a mutually rewarding relationship for our Government and Google. Google has "green light" from Government's scam-bags to rub small and large businesses. It's same sort of sales tax on us
as advertisers. Government gets more taxes from Google and Google is doing anything it wants.
We suppose to pay for time and spot on webpage only. Obviously time+spot cost will be defined by
how many clicks as range it may bring. Lets say I sell flowers and own flowers.com. I'm ready to pay $100 per prime/"working time hour" to get top position. Someone else is ready to pay only $80 per hour and others even less. This creates a fair environment where advertisers pay predicted amounts for time intervals they know and compete for. Price per spot and time interval should not go up during a particular day. This price should get agreed upon day before by 12pm let say. According to this prior bidding/auction to get a particular spot tomorrow advertisers will be aligned on the page. This technique obviously can be polished up in many ways and other similar PPT+S/Pay-Per-Time+Spot methods can be suggested. And I'm not a guru here, Search Engines knew this type of paying for ad services back in early years of the internet. However in order to create most tricky and scamming environment they pushed and subscribed us on PPC. We need and capable to stop this scam and
improve the search on the web. Thousands of lawyers already looking their ways to put Google down
for Click Fraud Schemes and Scam. PPC is completely insane idea to start with and it's going to put Google and alike out of business, if they will not adjust according to our feedbacks. If we all do something small in this regard and participate in class actions against Google and Bing/Yahoo/Msn/Microsoft we can see great change on the web pretty soon. We can even save each other and all web businesses using search engines for marketing billions and improve our lifestyles and economy.
Cheers!
Posted by AAC7 (4 comments )
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