RealTime IT News

Gift Shop Takes Google For $90M

Google is close to settling a click fraud case to the tune of $90 million, according to an attorney for the search giant.

The move would end 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.

In its filing, Lane said 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.

Google currently allows advertisers to apply for reimbursement for clicks they believe are invalid, said Nicole Wong, associate general counsel for Google, in a post on Google's blog.

Advertisers can do this for clicks that happen during the 60 days prior to notifying Google.

"Under the agreement with the plaintiffs, we are going to open up that window for all advertisers, regardless of when the questionable clicks occurred," said Wong, adding that Google and the other plaintiffs are going to ask the judge to approve the settlement.

Google will offer credits for all eligible invalid clicks. The credits can be used to purchase new advertising with Google.

"We do not know how many will apply and receive credits, but under the agreement, the total amount of credits, plus attorneys' fees, will not exceed $90 million," Wong said.

She added that this 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, through the date the settlement is approved by the judge.

Wong noted that most invalid clicks are caught by the company's automatic filters and discarded before they reach an advertiser's bill. She said that advertisers can notify Google and ask for reimbursement for the clicks not caught in advance.

Search Engine Watch editor Danny Sullivan said in a blog post the settlement seemed like a no-brainer.

"A $90 million settlement, compared to Google's revenues, is cheap to get this particular issue resolved," Sullivan said.

"It seems likely to buy an out from all potential cases going back for years. Compared to the estimated $260 to $290 million Google spent to resolve a patent lawsuit with Yahoo, this deal seems an especially cheap, smart one to take."

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