Google Announces “Click Fraud” Settlement

Internet giant Google Inc. has announced it has agreed to settle the “click fraud” suit brought against the company by smaller firms who claimed to have paid for bogus sales referrals. The bogus referrals are generated through “click fraud”.

Google will pay US$90 million to settle the suit. The amount will be split up between all advertisers who have used Google as Web advertising over the last four years, and can show improper sales charges on their books.

“Click fraud” occurs when people click repeatedly on a Google ad with no intention of buying anything. The advertiser then ends up paying for non-productive traffic. Google has been accused of trying to cover up the number of incidents.

The $90 million would involve legal fees and credits — rather than any cash payments — to any of its advertisers who apply to be part of the class settlement, once the judge certifies the agreement, Google spokesman Steve Langdon said.

Also named in the original lawsuit were the search businesses of Yahoo Inc., and lesser players Walt Disney Co., Lycos Inc., LookSmart Ltd. and Findwhat.com Inc., which is now known as MIVA Inc..

A spokeswoman for Yahoo said her company was prepared to continue to defend itself against the legal action. A spokesman for Disney could not immediately be reached.

Google’s proposed settlement deal would also cover Google ad search partners including America Online and Ask.com who were also originally named in the suit, which alleged that click fraud was a widespread Internet industry practice.

The case covers all advertisers using Google’s pay-per-click advertising system from February 2002 through the date when the judge certifies the settlement. The final settlement hearing is expected to take place in coming weeks.