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Old 04-05-2005   #1
dannysullivan
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Click Fraud Suit Filed Against Search Engines

Internet Firms Face Legal Test On Advertising Fees from the Wall Street Journal has news of -- if certified -- what will probably be the first class action suit filed over click fraud. The case is being lead by Lane's Gifts & Collectibles out of Arkansas and is involves Google, Yahoo, Ask Jeeves, AOL, Walt Disney, Lycos and FindWhat.

Last edited by dannysullivan : 04-05-2005 at 10:26 AM.
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Old 04-05-2005   #2
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Has gone behind a registration page... Nuts!!! Can you summarise for me a bit??
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Old 04-05-2005   #3
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Yea, I can't access the document either. Would love to hear about it though.
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Old 04-05-2005   #4
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Reload this page and try the link again. I'm pointing to a new place its online. It was free -- odd they pulled it.
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Old 04-05-2005   #5
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M$N is noticeably absent from the list.

I think trying to “prove” that yahoo, google and ask were colluding to drive up earnings is going to be a tough one.

You might be able to show that one or the other is negligent in preventing or detecting fraud, but linking them all together is going to be a very tough nut to crack, imo.

I am sooo glad I don't mess with ppc, never did like it from the start, and some say what i do is cheating...

Last edited by lots0 : 04-05-2005 at 12:34 PM.
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Old 04-05-2005   #6
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The engines are enriching themselves and claiming earnings that are not deserved, the real implication will be on Wall Street.

When someone has to account for fraud, watch the investors run for the hills.
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Old 04-05-2005   #7
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It sounds like an interesting case. I think they may have a good chance at proving the engines did not filter out all fraud they know about - or, at least, should have known about. I would like if the courts decide that the liability is on the engines side so that THEY have to prove valid clicks instead of US having to prove fraud. This could be done with some kind of external audit. Off course, this will cost the engines money but I think we need something like that not to risk a sudden crash of this market.
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Old 04-05-2005   #8
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It might be difficult to show that the engines charged advertisers for clicks that they knew were fraudulent, but maybe they have some real evidence. It might be easier to show negligence rather than knowledge.

I do know of a verifiable case when the publisher was paid a significant amount for clicks that the engine knew were fraudulent, but it doesn't mean that the advertisers were charged for them.

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Old 04-05-2005   #9
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Originally Posted by Mikkel deMib Svendsen
I think they may have a good chance at proving the engines did not filter out all fraud they know about - or, at least, should have known about.
Even Overture claims to be tracking about 90 different factors against click fraud. However, who has ever audited that????
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Old 04-06-2005   #10
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Is any of this actually illegal? I mean, is it against the Google T&C to do so? Do they promise to deliver only "human" clicks? And only so many from any one human in a day?

I know it is called "click fraud", but where is the fraud? is it the SE for not discovering the "fraudulent" click? Is it the clikck generator? Who?

As an analogy I have no expereince of, who actually audits the readership for newspapers and magazines? If I advertise because they have XYZ readership levels, does any independent group monitor this??

Besides which, surely the first port of call, short of a lawsuit, would be to ask for a refund. Wish there was a way to read more about the particulars of the suit... Anyone have any ideas on how to find an online copy of the suit??
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Old 04-06-2005   #11
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Quote:
I know it is called "click fraud", but where is the fraud? is it the SE for not discovering the "fraudulent" click? Is it the clikck generator? Who?
There are many kinds of fraudulent clicks. Some of them comes from identifyable bots and IPs know to be almost pure fraud. We all know that - and so do the engines. The question is, if they filter out ll clicks they KNOW comes from such fradulent sources. If not, then I think they are guilty.

Quote:
does any independent group monitor this??
Yes, I believe news paper distribution is monitored - at least here they are

There are many other areas where the merchant have the full responsibility - for example credit cards. If I go and tell my bank: I did not buy that item, THEY have to prove to me (with the help of the merchant) that I actually did. If they can't prove it (and even sometimes when they can) I keep my money.

An in fact, this is one way that lawyers has been talking about taking the click fraud cases - through the credit card laws
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Old 04-06-2005   #12
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We're working on getting a copy and will post to the blog when we do. In general, people do ask for refunds. The complaints often are that they don't get them or for as much as allowed. The fraud part is that someone is costing someone else money for their own gain. Competitors are having clicks driven up to cost them money. Others are clicking on contextual ads just to make publishers money. I think the real issue ultimately won't be is there fraud. There will always be some type of fraud. But have the search engines been found to full work to do what they can to prevent it and refund when found. There have been stories that they've allowed fraud situations to continue, even when they've known. If that actually was proved in court, not good.
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Old 04-06-2005   #13
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Quote:
Originally Posted by lots0
M$N is noticeably absent from the list.
They don't have their own advertising network. Not yet.

As for clickfraud - this is an issue that's been bubbling up for a while. A couple of short reads:

Mike Grehan's The click, the fraud and the ugly side of search
John Battelle's Other Shoe on Keyword Prices, Clickfraud

Also, as covered on SEW:
Are we all getting ripped off?
Click-Fraud said to be 50% of clicks

but especially:
Anti Click Fraud Tools
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Old 04-06-2005   #14
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The article is scant evidence, but the article says:
Quote:
...allege that the Internet companies knowingly overcharged for advertisements they sold and conspired with each other to continue doing so.
Now, the "Knowingly overcharged" bit is interesting, and I assume it means on a total bill, not by keyword (i.e. not that they charged $077 per click rather than $0.55). The collusion is even more interesting. Is that supposed to mean that Yahoo, Google et al got together and agreed to keep doing this? Or that they conspired with publishers to continue to do this (partner sites, e.g. Ask and Google)?

Quote:
Originally Posted by Danny
The fraud part is that someone is costing someone else money for their own gain.
I looked up fraud, and that is pretty close to the definition I got (well done ). But I guess I just wonder if it is legally fraud on the engines part? Are they responsible to the extent that it is fraud that they are perpetrating?

To prove so, one would need to show that PPCs knew specific clicks were fraudulent, or should have known, and continued to bill advertisers for these clicks. So, it all rests then on at what point should PPCs have known?

Some other (quasi-random) thoughts:
1. What defines a "click"? To prove there are fraudulent clicks, you would first have to define what a click is and, conversely, isn't. The model is "price per click", or "Cost Per Click", but does the word "click" imply that it should involve the pressing of a mouse button, or is click defined in terms of an HTTP request from a computer to the PPC engine? The engines could theoretically define click as whatever they like. https://adwords.google.com/support/b...ctx=en-uk:top5 is one page on which Google uses the phrase "click". does anyone know anywhere where Google or Overture define "click"?

Really can't see the engines arguing this, because it would really undermine trust in the service, which is worth more than refunding all the money in the suit most likely, but it is still a consideration. A good thing out of all this might be, if the case goes to court, that we may end up with a definition of what "click" really means. This is especially true for the click fraud "fringe", for example the multiple clicks in one time frame of X. What is acceptable, i.e. could be a human clicking multiple times, and what is fraud? Is 100 clicks a day fraud? Is it 10, 1 a day every day, 3 a week? How many? At what point should a search engine be legally required to act and issue refunds and what defines a legit or fraudulent click will be interesting.

2. What auditing does / did Google et al do on clicks, and has Google, Overture et al ever given a refund/s without being prompted by the advertiser? As Danny said, we all agree that some fraud does happen (even though I feel there is some dispute as to what defines a click). Given some fraud is a given, the engines must, with any reasonable amount of due diligence, have known about at least some of it. What action the collective engines did (or did not) take refunding this ill-gotten booty is absolutely vital. If I was Google, Overture or LookSmart, I would want to have refunded, "unprovoked", at least some money, even a few thousand out of the millions collected, well before the suit was filed, otherwise I would be feeling ever so slightly scared by the suit.

3. Along the same lines, there are known cases in which AdSense publishers were "sacked" for "bad" clicks (you couldn't see for the other threads @ WMW some months with all the AdSense complaints). The removal of some sites from the publisher network is, IMHO, both a plus and a minus for Google (alone on this occasion). I thought, at the time, that it was dangerous to sack publishers without issuing refunds / asking for funds to be returned. After all, if there were reasons to sack people, there must have been fraudulent clicks, ergo refunds to advertisers should have been on the cards.
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Old 04-06-2005   #15
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Non-financial motivations for massive click fraud

The various financial motivations behind click fraud – for affiliates and publishers, competitors, disgruntled former employees, or even SEM consultants who have not been paid by a scurrilous client – are fuel enough for click fraud and subsequent law suits. However, I feel that not enough attention has been paid to the motivations behind virus propagators, motivations that pose a huge threat to the PPC industry. What financial incentive is there for a 14 year old hacker to program and release a virus? Though I’m not a programmer, I can imagine that it would not be too difficult for a hacker to propagate a script that unleashes torrents of bots that search and click PPC ads, perhaps with a set of phrases that attack a given industry. Such bots could use rotating proxy servers, randomized timing, and other methods that would render millions of dollars worth of click fraud over weeks and months virtually undetectable as fraud. Not only a hacker, but also a zealous terrorist could do willful damage to a major Western capitalist industry in this way. I have no idea how or whether such an event would play out in the legal system, but I worry that within 12 months or so, a major attack like this will happen.
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Old 04-06-2005   #16
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That's not hacking - it's programming, and it's already happened. Programs do make the clicks, and have done for years.
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Old 04-06-2005   #17
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Semantics

Quote:
Originally Posted by PhilC
That's not hacking - it's programming, and it's already happened. Programs do make the clicks, and have done for years.
True enough. But the larger concern still stays with me, regardless of how we lable who does it.
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Old 04-06-2005   #18
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Is any of this actually illegal? I mean, is it against the Google T&C to do so? Do they promise to deliver only "human" clicks? And only so many from any one human in a day?
ABSOLUTELY I had an issue with a second tier company last year and they refused to refund my money until I actually did the research and called the US Attorney General. The AG has not started to actively enforce this like spam, but hopefully it is coming.

Here is the federal statute that Click Fraud Violates. There are also a lot of state statutes as well. Click fraud is not only a civil offense. It is a criminal offence. If the Search Engine does not do anything to stop it or actually encourages it, they are liable. I got this directly from a DOJ attorney after I was on hold for an hour and a half. It is covered under the term "wire"

By the way, after I emailed this to the second tier company, I got a full refund that day.

UNITED STATES CODE ANNOTATEDTITLE 18. CRIMES AND CRIMINAL PROCEDUREPART I--CRIMESCHAPTER 63--MAIL FRAUD

§ 1343. Fraud by wire, radio, or television

Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.

http://www.usdoj.gov/criminal/cybercrime/1343NEW.htm

Last edited by krisval : 04-06-2005 at 11:07 AM.
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Old 04-06-2005   #19
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...but also a zealous terrorist could do willful damage to a major Western capitalist industry in this way.
You have got to be kidding! You better quit watching all that cable news, or at least filter the "so called" news with a little common sense...
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Old 04-06-2005   #20
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Originally Posted by lots0
You have got to be kidding! You better quit watching all that cable news, or at least filter the "so called" news with a little common sense...
Actually, I agree that the terrorist threat is largely a fabrication. Griffin's eloquent and staggering book, The New Pearl Harbor, implies this, as do others. But this is for another forum.
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