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Green Lights For Google's Click Fraud Settlement

An Arkansas Judge has approved the terms of Google's settlement with advertisers suing the search giant for click fraud.

Google  will pay $60 million in credits to advertisers who claimed the company improperly billed them for fraudulent "clicks" on their ads, and $30 million in legal fees for a $90 million tab, according to the ruling.

Those credits can be used to purchase new advertising with Google, essentially putting more money back into the company. The attorneys do not get paid in credits.

The new deal brings closure to a gift shop's gripe that the search engine giant was charging advertisers for clicks on online ads that did not come from consumers.

Lane's Gifts and Collectibles and Caulfield Investigations filed the suit in February 2005 in Arkansas against Google, Yahoo , Time Warner  and its America Online and Netscape divisions.

Lane claimed Google and the other plaintiffs collected fees for pay-for-click advertising, which were not actually generated by consumers clicking on the search engine sites to get to Lane's Gifts.

In his decision, Arkansas Circuit Court Judge Joe E. Griffin called the settlement fair, reasonable and adequate for all members of the class.

Google Associate Head Counsel Nicole Wong said in a blog post that Google is pleased Judge Griffin approved the deal.

"We look forward to continuing to manage invalid clicks effectively and provide our advertisers with an outstanding return on their investment."

The agreement covers all advertisers who claim to have been charged but not reimbursed for invalid clicks dating from 2002, when Google launched its "cost per click" advertising program, to the present.

The case prompted Google to set up a system that allows advertisers to apply for reimbursement for clicks they believe are invalid. Those who wish to file a claim can visit this site.

Google is getting off easy, according to Joseph W. Sanscrainte, an attorney with the international law firm Bryan Cave LLP.

"Not only is $90 million light, in terms of the size of Google and how much they could have paid, it's not as if they're paying out the total $90 million, they're making $60 million in credits available to the plaintiffs in the case so that they can use those credits to get more advertisements on Google," said Sanscrainte, who specializes in consumer protection, privacy and the Internet.

"It's put right back in the business," he said, noting that perhaps the only more favorable outcome for Google would be an outright dismissal of the case.

Click fraud is a trend that is making businesses wary of their costs of listing on search engines, which make billions from pay-for-click advertising.

Currently, Google and other search engines credit advertisers' accounts for click frauds they filter out before sending advertisers bills, making it a passive, self-regulation.

Sanscrainte said he expects the pay-per-click model will come under even more scrutiny with lawmakers.

"There are certainly going to be more laws passed that say specifically that click fraud is illegal and what that means is that regulators and state AGs will have the authority to go after it and prosecute," he said.