Click fraud enters the courtroom

The words on the March Biznology newsletter are barely dry before we start seeing a whole new side of the click fraud wars—order in the court! Two notable lawsuits have been filed to make case law where there is no written law.

The first story is actually an old story—but it was not widely reported back in November when it happened. CNET reports that Google has filed suit against a company allegedly perpetrating click fraud. Many people predicted this one coming, but it is not clear if click fraud is illegal, or whether it is solid grounds upon to which to win a lawsuit.
Most people would consider click fraud unethical, but despite the word “fraud” in its name, it’s not clear that it breaks any laws. Click fraud artists are clicking on Web pages to cause per-click fees to be charged when they have no intention of ever buying the item being marketed, but it’s not clear that there is any duty for Web surfers to be serious buyers in order to click a hypertext link. You could just as easily argue that radio listeners are defrauding advertisers if they listen to the programs but don’t buy anything advertised. The point is that neither radio listeners nor Web surfers are obligated to ever buy anything advertised within the content they consume. I am no lawyer (I don’t even play one on TV), but I wonder if just because the content provider expects people to buy something whether that is enough for a court to find fraud.
The second case may be the more interesting one for search marketers. A potential class-action suit was filed back in February against Google, Yahoo!, Ask Jeeves, and others on behalf of paid placement advertisers. The suit is currently undergoing certification as a class-action lawsuit, which, if successful, would allow any search marketer that met certain court-prescribed criteria to join the lawsuit as a plaintiff.
This case argues that the defendants (the search engines) should be liable for damages because they have failed to prevent click fraud. From my reading of the news reports, it appears that the engines are being charged as conspirators, which seems like stretch to me. You could imagine a court possibly finding for the plaintiffs on grounds of negligence—where the search engines are found to have been lax in policing click fraud to the detriment of customers to whom they have promised a service.
But conspiracy? Hard to imagine that the search engines all got together and looked the other way as click fraud occurred, or worse, were parties to perpetrate the fraud in the first place. And even if they did (which I don’t believe for a minute), how could anyone prove it in court? Conspiracies are notoriously difficult to prove—you see racketeering cases drag on for months in the face of thousands of mind-numbing details. Can you imagine the e-mails that would be subpoenaed if this case goes forward?
Again, I am no legal eagle, but I think this case is not the one we are waiting for. Let’s see what happens when a class-action negligence case is filed. We probably don’t have to wait very long for it. In fact, it may have been filed already—both of these cases were filed for weeks before they drew wide publicity.
As I said in the March Biznology newsletter, I think that the whole per-click model is the real problem. Maybe changing the market to pay-per-action would take the incentive for fraud away, so that the market can solve the problem instead of the courts.

Mike Moran

Mike Moran is a Converseon, an AI powered consumer intelligence technology and consulting firm. He is also a senior strategist for SoloSegment, a marketing automation software solutions and services firm. Mike also served as a member of the Board of Directors of SEMPO. Mike spent 30 years at IBM, rising to Distinguished Engineer, an executive-level technical position. Mike held various roles in his IBM career, including eight years at IBM’s customer-facing website,, most recently as the Manager of Web Experience, where he led 65 information architects, web designers, webmasters, programmers, and technical architects around the world. Mike's newest book is Outside-In Marketing with world-renowned author James Mathewson. He is co-author of the best-selling Search Engine Marketing, Inc. (with fellow search marketing expert Bill Hunt), now in its Third Edition. Mike is also the author of the acclaimed internet marketing book, Do It Wrong Quickly: How the Web Changes the Old Marketing Rules, named one of best business books of 2007 by the Miami Herald. Mike founded and writes for Biznology® and writes regularly for other blogs. In addition to Mike’s broad technical background, he holds an Advanced Certificate in Market Management Practice from the Royal UK Charter Institute of Marketing and is a Visiting Lecturer at the University of Virginia’s Darden School of Business. He also teaches at Rutgers Business School. He was a Senior Fellow at the Society for New Communications Research and is now a Senior Fellow of The Conference Board. A Certified Speaking Professional, Mike regularly makes speaking appearances. Mike’s previous appearances include keynote speaking appearances worldwide

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