Google has filed its first click fraud lawsuit, charging a Texas-based Web site and its owners generated fraudulent clicks on ads in its AdSense program, causing Google to pay them for useless traffic to its advertisers.
The lawsuit, filed last week in a California Superior Court, alleges that, beginning in August 2003, Auction Experts International and its founders Sergio Morfin and Alexei Leonov clicked on AdSense ads on the Auction Experts site and paid up to 50 unidentified individuals to do the same.
The move should serve as a warning shot across the bow of potential AdSense abusers, according to Kevin Lee, CEO of search marketing firm Did-It.com. The potential for click fraud is very large, but it doesn't seem to be a widespread problem, he said.
"I'm pleased to see them take action so it doesn't get out of control," he said. "You can never control it 100 percent, but they're doing a pretty good job."
Once the abuse was discovered, Google terminated Auction Experts' AdSense account, credited advertisers for every click generated from Auction Experts' site, and initiated legal action, according to the lawsuit. Generally a search engine will stop after booting the offending site out of its program and crediting the advertisers, Lee said, adding that this may be the first case where a search engine took legal action.
In the suit, Google charges Auction Experts with breach of contract and breach of good faith, for violating the AdSense terms and conditions. Another charge of interference with a contract was made, for the disruption of Google's contractual relationships with its advertisers. It also adds charges of fraudulent concealment and fraud.
Google is seeking compensatory and punitive damages, a return of all money paid to Auction Experts through its AdSense participation, and court costs.
"We are vigilant in protecting our advertisers and the integrity of our programs. We have sophisticated technology that detects and eliminates fraud. This lawsuit against Auctions Expert demonstrates the success of our anti-fraud system and that we will take legal action when appropriate," said Google spokesman Steve Langdon.
In March, a programmer was arrested after allegedly attempting to blackmail Google for $100,000 to prevent him from releasing software he had developed to produce fraudulent clicks to defraud AdSense.
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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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