Microsoft is first to sue over click fraud

by Elizabeth Clifford-Marsh, revolutionmagazine.com 16-Jun-09, 11:13

LONDON - Microsoft has filed a law suit over click fraud, making it the first search provider to take the issue to court.

Microsoft alleges Eric Lam, Gordon Lam, and Melanie Suen, from Vancouver manipulated search results on keywords relating to automotive insurance and the World of Warcraft video game.

The search giant believes Eric Lam and his associates were responsible for the click fraud schemes, which were designed to exhaust rival advertiser's budgets, so that small sites he worked for would move up the search rankings. Lam exploited keywords relating to automotive insurance to sabotage competing advertisers and gain user information. When users clicked through to the sites Lam ran for they were asked to supply contact information, which he then sold on to automotive insurance providers.

Lam also ran a similar scam targetting keywords relating to World of Warcraft.

Microsoft filed the civil complaint in the United States District Court in Seattle, seeking $750,000 (£456,000) in damages. By filing the suit it is hoping to set a legal precedent, which can be referred to in future, potentially larger cases.

Microsoft estimates Lam made $250,000 (£152,000) from his scam, but it cost the firm $1.5 million (£913m) in refunds to advertisers.

Tim Cranton, associate general counsel for Microsoft, said the company has decided to be more proactive against click fraud, aiming to stamp out the practise by making it more expensive for perpetrators.

According to ClickForensics, 13.8 per cent of clicks in Q1 this year were fraudulent. Click fraud can be a person or a computer programme ('bot') that systematically clicks on paid search ads on search engines and ad networks, thereby costing the advertiser money and defrauding them of their marketing budget.

Comments

Andrew Baird - 17/06/2009

I find it hard to see why this is illegal - imoral maybe, but not illegal. It should be up to the advertisers to block repeated clicks from identical IPs.

Ken Parnham - 19/06/2009

As an ad server provider we take click fraud very seriously. It's our responsibility to make sure click fraud doesn't happen so that clients have confidence and trust in us. We have acknowledged the problem in the industry to the extent of having developed a specific adserving function in our technology that enables us to analyse any suspicious data. It's a quick and robust method of viewing the data to confirm or deny any potential click fraud. It's a function every publisher/advertiser should be asking for when looking for a trustworthy solution. Ken Parnham, Country Manager, ADTECH