Google Agrees to Pay $90mln on Click Fraud Lawsuit

Hitokiri writes "Google has agreed to pay up to $90 million to settle a class action lawsuit 'Lane's Gifts v. Google'. The settlement stems from a lawsuit filed by Lane's Gifts earlier this year in an Arkansas state court and is designed to settle all outstanding claims against Google for fraud committed using its pay-per-click ad system back to 2002Google has made a statement on their blog."

It's credits - not dollars

[tacokill]

Hey submitter and editors -- Google isn't PAYING anything. They are giving credits to buy more advertising.

Am I the only one who recognizes the difference between "getting paid $1" and "getting credit for $1 - at that company"?

Re:It's credits - not dollars

[biocute]

From a company like Google, credits are as good as cash.

Now Lane's Gifts just need to set up an advertising agency, and its clients will advertise via its account (and credits) on Google.

Re:Tip of the iceberg

[xiando]

"So I wonder how effective all these net-ads are, esp. with people blocking them with FireFox's AdBlock, etc."

There are people out there who have a hard time working the remote control for their TV. When these people go on the Internet they use "Internet Explorer" with no updates and they don't even know there are alternatives to it. Imagine your mother on the Internet to get an idea who's looking at the pop-ups desperately trying to figure out how to close that (or any other) window.

Total number of ads stays the same... what happens

[Anonymous Coward]

If Google is paying out up to $90m in advertising credits, that won't make Google show any more ads. I understand Google uses some kind of auction system to price ads. If the people getting these credits will have more of their ads shown, others will have less of their ads shown. Will the auction system reduce prices for everyone else due to this, or will clickthroughs simply go down slightly so that, in tune with the laws of economics, people will notice their clickthrough rates decreasing and a few of them will stop advertising with Google?

Re:It's credits - not dollars

[dwater]

> the total amount of credits, ***plus attorneys fees***, will not exceed $90 million

Well, that must reduce the amount a little, surely...

Re:It's credits - not dollars

[polv0]

For a publicly traded company paying something can be better than having to expense something or reducing your revenues. The primary quantity of interest is net income, which is accrued revenues - expenses and is not cash-flows. They could very well have decided to expense the whole amount this year, which would have hurt their earnings regardless of when they paid it. However, as with most class-action lawsuits, the settlement terms require that the claimants pursue the plaintiff for their reimbursement - hence the credits. The fact that these will be deducted from revenues in the periods in which they are redeemed implies that Google either expects a large amount of these not to go unused, or is doing some fancy accounting to smooth out their earnings.

Re:It's ALL credits - not dollars

[x2A]

Okay that's RUBBISH. The strength of the economy is nothing to do with how much money is out there, but how much it's moving around.

Cash is an abstraction of value. It's value comes from the fact that it's mutually recognised as having a value. That's where it's value comes from, a common-agreement. You find *anything* that people are just as willing to exchange for services/resources as money. Gold's "worthless" unless you can find someone who's willing to exchange it for something you want (eg, sex). A pig's useless if you're living with vegie hippies (not that they have money anyway).

Money means not having to look long and hard for someone who's willing to trade with you. This means you have time for other things. Money is an abstract representation of time ("time is money" is true). There is no way, by the furthest stretch of imagination, that you can say time is worthless. It's the most valuable thing you've got.

How about Overture aka Yahoo...

[truckaxle]

Overture claims [perlworks.com] to provide "Click Protection" for their pay-per-click advertising service. In reality they fail to prevent the most basic and easiest to detect non-authentic clicks - that is competitors clicking on competitors. They do not even filter out a customer clicking on their own links from within the Overture manager. Nor do they provide a method for an advertiser to test their own ad rendered URL's - a necessary function as a means to test the validity of an entered URL. Since filtering out such clicks would be simple and straight forward using established cookies or session id's - I can only speculate the reasons for not patching this obvious flaw and question the "sophistication of Overtures "Click Protection".

Re:Tip of the iceberg

[x2A]

Popups etc, I agree, but I've used google adwords from both sides - when looking for cheap secure certificates, for various sites I've worked on, I've followed google ad's AND made the purchase. Also, one of my clients registers adwords, I was actually surprised at how many direct sales it brings in (not counting people who come to the site, then come back later to make the purchase - can't track those so easily).

Google ads work because they're shown to you while you're actually looking for them.

You're right, but I wonder

[tkrotchko]

"Many businesses are still in a 'honeymoon' with Google and aren't yet seriously computing the performance of their clicks (how many clicks turn into sales)."

I'll try not to be Mr. Obvious here, but consider this: when companies buy time on TV, they have no idea how effective those ads are. What I mean is, they can see the ratings for the TV show and you can guess how many people saw those ads based on the ratings, but that is no guarantee anybody actually watched the commercial, and even if they did, you have no idea if people associate your product with that commercial, and even if you did, you have no idea how that translates into a sale.

But yet despite all those handicaps, companies still purchase TV, radio, and print ads.

For online advertising, google ads or anything like that... at least you can measure some sort of direct impact... the month before, I had X hits, this month I had Y clicks The month before I had $X in sales, this month I had $Y in sales. In both case, I can measure those numbers well enough to draw a conclusion pretty quickly about the effectiveness of the ad.

The comparison is not different than direct mail, email, or other ads... does my revenue increase more than the cost of the advertising. If it does, then it's good for me. If it doesn't, it's not good for me, stop advertising.

If you don't know the impact in 3 months, then shame on you for not paying attention. And that's really my point. Google has been around long enough for companies to draw a conclusion as to the effectiveness of those ads. Either they're effective, or companies are not willing to admit that Google isn't effective.