Lawsuit filed by Seattle locksmith is first click fraud legal action Google has faced since 2006.
In the first click fraud lawsuit to be filed against Google in years, a Seattle locksmith has claimed the search giant charged it for paid-search clicks allegedly made by a competitor.
123 Lock & Key said in the suit filed in King County, WA that Google violated state laws and breached its contract by charging for allegedly questionable clicks. The alleged fraud took place in March, the locksmith company said, noting it suddenly began receiving hundreds of new clicks from paid search listings, often in a single minute. None of these clicks resulted in new business or even leads and as a result the company ended its search program with Google.
Google did not comment on the lawsuit, which is the first against it since 2006, when Google paid $90 million to settle a class-action click fraud suit filed in Arkansas.
But Richard Sim, VP of product management and marketing at Anchor Intelligence, noted the suit comes at a time when click fraud once again seems to be on the rise. A recent Anchor Intelligence report noted that for its network the attempted click fraud rate during the first quarter of 2010 was 29.2 percent, up from 25.7 percent in the fourth quarter of 2009.
"Click fraud has always had peaks and valleys, but we are starting to see it emerge as an issue again partly because of the economy," Sim said, adding that Microsoft’s pending takeover of many of Yahoo’s search functions may also be indirectly driving interest in the issue. "Microsoft has always taken an active stance against click fraud and by bringing two very high profile recent suits against two perpetrators, it’s bringing the issue to the press and getting a lot more companies to think about it again."
While the Seattle case alleges a competing locksmith may have been behind the click fraud, Sim noted that in many cases, it’s online sites looking to drive traffic on the cheap that are getting duped.
"There is a grey area of publishers and other sites buying traffic and clicks from different ad networks, where they’re pretty sure the quality of the traffic is going to be pretty bad because they’re only paying pennies on the dollar for them," explained Sim. "But the site figures they’re not going to ask any questions because the onus is on the ad network and the search engine to know what’s real and what’s fraud."
Andre M. Di Mino, cofounder/director of The Shadowserver Foundation, said any surge could also be linked to an increase of automated botnets for various types of nefarious online activities, including click fraud.
"Botnets are always going to be looking for areas of opportunity, whether it’s advertising click fraud, sending spam, denial of service attacks or financial fraud and the harvesting of private information," said Di Mino, whose non-profit organization gathers and tracks and reports on malware, botnet activity and electronic fraud. "Botnets are really the Swiss Army Knife of the cyber criminal and people who use them are getting better in terms of making them more sophisticated and in the procedures and activities they use them for."
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David Ward is a veteran freelance journalist based in San Diego, who currently focuses on online marketing, digital entertainment and the growth on new consumer technologies such as 3D in the home.
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