Yahoo Settles Click Fraud Suit

  |  June 29, 2006   |  Comments

The company will allow advertisers to file claims for potential fraudulent clicks dating back to January 2004.

A federal judge has granted preliminary approval on a class-action click fraud settlement by Yahoo.

The lawsuit, filed in June 2005 by Checkmate Strategic Group, claimed Yahoo had improperly charged advertisers for traffic that involved click fraud. Yahoo has agreed to pay just under $5 million to cover Checkmate's legal fees, and has laid out a five-part plan to address advertiser's click fraud concerns.

Yahoo advertisers will be allowed to submit click fraud claims dating back to January 2004, and Yahoo will reimburse any confirmed fraudulent clicks in cash, with no set limit on the amount of claims it will cover. Under a click fraud settlement by Google in March, advertisers will receive credits for additional Google ads instead of cash, with a limit set at $60 million.

Yahoo is still involved in that lawsuit, filed by Lane's Gifts and Collectibles in Arkansas, but the company said this settlement will supersede that case and any other pending suits covering the time period of January 2004 to the date of the settlement.

Yahoo credits the favorable settlement to the fact it invited Checkmate's attorneys and experts to tour its clickthrough protection (CTP) facilities, which led them to determine that "Yahoo has in the past and continues to operate a click protection system that goes above and beyond what is necessary to address recent industry estimates about click fraud," according to a statement by Reggie Davis, associate general counsel for Yahoo, and John Slade, senior director of Yahoo's CTP program.

"We are very pleased with their finding, as it validates the effectiveness of our system, but we recognize that some advertisers may still have questions about certain clicks and that many advertisers want to hear more from Yahoo with respect to click fraud and related issues," Slade said in the statement.

In addition to the one-time extension period for claims, Yahoo has agreed to appoint a traffic quality advocate, a sort of ombudsman to voice advertiser concerns within the company. The company will also invite individual advertisers to tour its CTP system, which monitors and filters out fraudulent clicks, and to interact with the CTP team.

Yahoo will also work with third parties to develop industry-wide definitions of click fraud and a comprehensive lists of identified click 'bots. The company will also build an online resource center to provide more detailed information about click fraud and related traffic quality issues.

Additional efforts Yahoo will undertake which were not mandated by the settlement include providing more clarification about whether refunds for advertisers are due to click fraud or another traffic quality issue, and providing more clearly defined timeframes for Yahoo to respond to an advertiser's inquiry.

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ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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