Some Plaintiffs Fight Google Click Fraud Settlement

As an Arkansas judge considers whether to give his final approval for a settlement in a high-profile suit against Google alleging widespread click fraud, a group of plaintiffs is trying to block the deal, saying the search engine has not done enough to stop the deception.

Attorneys for some plaintiffs told the court Monday that Google has failed to exercise “reasonable care” to stem click fraud, which can lead to huge advertising bills but relatively little increase in business in some cases.

The settlement, which was first announced in March and has been given preliminary approval, calls for Google to pay US$30 million in legal fees and set aside $60 million worth of credits that advertisers can use on Google’s online ad network. Miller County Circuit Judge Joe Griffin must give final approval for the deal to take effect.

Some fifty-one plaintiffs have raised objections to the deal since it was announced. Most are smaller advertisers who have complained in court documents that their complaints are being overlooked because they don’t have the resources to press their claims.

The turmoil about the settlement also comes after Yahoo struck a deal to end its own click fraud lawsuit. In that case, Yahoo will offer credits that can be exchange for cash. Its liability for credits has not been capped.

Nothing Proven

The judge overseeing the case convened a hearing Monday on whether to finalize the deal. The hearing is expected to last into Tuesday with a decision possible shortly after that.

In a brief filed to answer the complaints, Google reiterated that it feels that plaintiffs would have been hard pressed to prove that click fraud is pervasive on its network and that monetary damages would be higher even if the plaintiffs prevailed at trial.

“Those who object to the amount of the settlement merely assume that undetected ‘click fraud’ is pervasive, and that they could prove this at trial,” attorneys for Google wrote in the filing. “But Google contends that class members could never prove such a claim, because Google aggressively roots out click fraud, using highly sophisticated techniques and processes, and minimizes any impact it has on advertisers.”

Google also said a portion of the objections have come from overseas advertisers who joined the class and may not understand how the U.S. justice system works in civil cases.

Others are U.S.-based companies who have complained to the court that the deal was struck mainly between Google and large law firms that helped expand the case beyond its original complainants, Texarkana, Ark.-based Lane’s Gifts and Collectibles.

One plaintiff, Ozdachs Consulting, said in a letter to the court that it felt small advertisers were not being taken into account in the deal. “The proposed settlement fails to address our damages and the damages of those in my situation,” said Galen Workman, owner of the San Francisco-based firm. “The settlement is a sweetheart deal among large companies and their attorneys. It is in the interest of justice that it be thrown out.”

Google’s efforts have been largely backed by an independent report filed with the court, which cited Google’s ongoing efforts to internally identify and filter fraudulent clicks. The same report also said it was all but impossible to quantify the amount of fraud being committed without additional study.

How Big?

The dispute over the settlement hinges on the question of how much click fraud is actually taking place. That debate has raged for some time, with estimates varying widely from 10 percent or less to as much as 50 percent.

The problem has been coming to a head for several reasons, most notably the growth of keyword advertising, which has greatly increased the per-click price Google and its rivals are able to fetch for certain terms.

A report released just last week argued that click fraud is actually on the increase. The Click Fraud Network said in its Index report that 14.1 percent of all advertising clicks recorded in the second quarter were fraudulent, up from 13.7 percent in the first quarter.

The report also found even higher click-fraud rates among keywords with costly per-click prices of $2 or more per click. There was some good news for Google, Yahoo and others, with such so-called Tier 1 search players boasting lower fraud levels than second-tier search engines.

After its own settlement, Yahoo said one of the reasons it was able to reach a deal with its own plaintiffs was a demonstration of its efforts to stop click fraud, including giving advertisers tours of its operations center for stamping out the deception.

After several years of doing little on their own, search engines are only now becoming motivated by various forces to tackle the problem, said Skip Pratt, general manager of click fraud tracking firm PPC Trax.

“In the past, advertisers would complain and a deal would be struck,” Pratt said. “Once they start becoming big class actions with lots of risk for the companies, they see the need to take action.”