This week Microsoft has decided to do something about click fraud and has filed a lawsuit claiming $750,000 in damages. The defendants are a Canadian family who are alleged to have run a scam which led to a large number of false clicks being placed across the Microsoft Pay Per Click advertising network.
The fraud used automated programs which entered search terms onto the Microsoft search engine (formerly Live Search, now Bing). These programs then clicked on the highest paying ads so that the daily budgets were run down and the adverts would soon stop showing. This allowed the lower paying adverts (used by the fraudsters) to rise up to the top.
Whilst $750,000 is petty cash for a company the size of Microsoft, the software firm hopes that the lawsuit will make a statement and show the price of click fraud, warning off other would-be scammers.
In an interview with the New York Times, Tim Cranton, associate general counsel for Microsoft, said “We have decided to become more active in the commercial fraud area on the enforcement side. The theory is you can change the economics around crime or fraud by making it more expensive.”
The investigation started after Microsoft received several complaints from car insurance advertisers saying that they had seen unusual increases in traffic from their Pay Per Click ads. Keywords such as "auto insurance quote" were being searched far more frequently and the adverts were receiving much higher click through rates.
Microsoft claims that Eric Lam, one of the three people named in the lawsuit, had his own Pay Per Click advertising in place for the insurance keywords, directing traffic through to his site where he would collect a visitors info in order to sell it on to insurance companies. Microsoft believes that Lam made around $250,000 from the scam, while it had to refund $1.5m to advertisers that received the false clicks.
Other search engines that offer Pay Per Click advertising have also noticed problems with click fraud, and have often fought back. In 2004, Google filed a successful suit that won the company $75,000 from a webmaster who was using fake traffic to increase his Adsense earnings.