Google to settle click-fraud lawsuit for US$90M

Google has agreed to settle a class action lawsuit brought against it over click fraud for $90 million.

Google has agreed to settle a class action lawsuit brought against it over the issue of click fraud, which some industry experts believe could seriously threaten the company's main source of revenue: pay-per-click advertising. Google will pay as much as US$90 million to affected advertisers in attorneys' fees and credits as part of the settlement.

The case was filed in an Arkansas court against Google and other search engine operators and providers of pay-per-click ads, such as Yahoo and America Online. The lead plaintiff is Lane's Gifts & Collectibles, which sells items such as dolls, figurines and teddy bears online, over the phone and by mail.

At issue is click fraud, a practice in which someone clicks on a pay-per-click ad with a malicious intent. For example, a company official may click on competitors' ads, knowing that every time he does that, it costs his competitors money. Or the publisher of a Web site that runs pay-per-click ads may engage in the practice because the more the ads on his site are clicked on, the more commission money the publisher receives. The biggest losers from click fraud are the advertisers, because they are paying for clicks on ads that will not generate any business.

Pay-per-click ads are commonly served up by search engines based on the topic of a user's query. These ads are the main source of revenue for Google and have become an important business for Yahoo.

In the Lane's Gift case, Google and the plaintiffs have reached an agreement, which would still need to be approved by the judge, wrote Nicole Wong, associate general counsel at Google, on the company's official blog on Wednesday.

Details will become public when the proposed settlement is filed for the judge's consideration, but one key agreement is that Google has agreed to compensate advertisers that qualify for participation in the settlement. The company would pay out a maximum of US$90 million in the form of attorneys' fees and credits for purchasing ads on Google.

"This agreement covers all advertisers who claim to have been charged but not reimbursed for invalid clicks dating from 2002 when we launched our 'cost per click' advertising program through the date the settlement is approved by the judge," Wong wrote.

Google will account for the attorneys' fees as an expense, "most likely in the first quarter, once the amount is determined," while the credits will be noted as a revenue reduction in periods in which they are redeemed, Wong wrote.

Google executives have said in the past that click fraud is a problem that the company takes seriously and aggressively polices, but that it hasn't had a material effect on the company's business.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?