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.