Jul 27, 2006 (11:07 AM EDT)
Judge Approves Deal In Google Click-Fraud Case

Read the Original Article at InformationWeek

An Arkansas judge on Thursday approved Google Inc.'s $90 million settlement of a class-action lawsuit that accused the search engine giant of failing to take enough steps to reduce advertisers' losses to click fraud.

In approving the deal, Circuit Judge Joe Griffin said in his ruling that the settlement was "fair, reasonable and adequate." The agreement calls for Google to allow all advertisers to apply for credit for invalid clicks, regardless of when they occurred. The amount of credits is capped at $90 million.

"We're pleased Judge Griffin has affirmed the settlement as appropriate and fair to advertisers," Nicole Wong, associate general counsel for Google, said in an emailed statement. "We look forward to continuing to manage invalid clicks effectively and provide our advertisers with an outstanding return on their investment."

Online gift company Lane's Gifts & Collectibles and Caulfield Investigations, a private investigation firm, filed the lawsuit in February 2005, claiming Google, Yahoo Inc. and AOL, a division of Time Warner Inc., were billing advertisers for fraudulent clicks, and then failing to reimburse them. Legal proceedings against defendants Yahoo and AOL are still pending.

Click fraud remains a serious problem for advertisers, whose estimates often clash with those of search engines. In seeking reimbursements, advertisers complain that search engines do not provide enough data to prove their click fraud numbers are more accurate.

The practice comes in two major forms: competitive and network. The former is when a competitor clicks on a business's ad to drive up the cost of the advertisement, and the latter is when a third-party site hosting the ad manufactures phony clicks in order to get more money from the search engine.

The extent of click fraud varies substantially, with estimates ranging from next to nothing in certain markets to 20 percent of all clicks.

Google on Wednesday tried to appease advertisers by offering to show them click-fraud reports on a specific account. Advertisers, however, must pay for the reports, which display invalid clicks filtered out of Google's AdWords system.