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Click fraud is a scam that targets advertising companies by re-delivering ads to fake websites, causing companies to pay for clicks that are not genuine. It can be used to cause competitors to lose money or help friends make more profit. Companies may not prosecute small scams, but class action lawsuits can occur for major losses.
Click fraud is a new type of Internet scam that targets advertising companies rather than consumers. On pay-per-click advertising, a company places a small ad on the front pages like Google or Yahoo, which offer an advertising service. The ad is shown to everyone, but the business only pays for the ad if a potential customer clicks on the ad. When this happens, the company is billed and Google or Yahoo makes a profit. The price is low, sometimes as low as a penny per click, but when millions of consumers click on the ad each month, the numbers add up.
Click fraud exploited pay-per-click advertising programs by re-delivering ads to other web pages. While this in itself isn’t illegal, the problem is that it becomes quite easy for anyone to set up a fake website and post a list of links or ads; these ads directly contribute to click fraud by allowing publishers, acting as intermediaries, to share revenue directly with Google’s AdWords/AdSense programs. Most people who commit click fraud are operating a scam so small that it goes undetected by companies. Those who are really trying to profit from click fraud may have complex software programs that trick the company into believing that the clicks are coming from different computers or even from different countries.
Other forms of click fraud are not directly related to profits. Individuals can use click fraud to cause a competitor business to lose money or to help a friend who is acting as a middleman to make more profit. While there is no direct connection to money in these cases, the person clicking on the ads can be accused of click fraud. Most companies, however, won’t bother to prosecute it, as the court costs won’t justify the hassle. However, class action lawsuits do occur for major losses. In 2005, a brokerage firm called Auction Experts lost a $50,000 lawsuit filed by Google over click fraud. Yahoo filed a similar lawsuit in 2006 relating to its Yahoo! Search Marketing pay-per-click program.
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