• United States



by Dave Gradijan

Google Click-Fraud Settlement OK’d by Judge

Jul 28, 20064 mins
CSO and CISOData and Information Security

A judge has given final approval to the settlement of a click-fraud lawsuit, despite critics’ characterization of the settlement as a slap on the wrist for Google.

Judge Joe Griffin, of Miller County Circuit Court in Arkansas, heard arguments for and against approving the settlement on Monday and Tuesday, and signed off on the final settlement on Wednesday, according to a copy of the court order.

“We’re pleased Judge Griffin has affirmed the settlement as appropriate and fair to advertisers. We look forward to continuing to manage invalid clicks effectively and provide our advertisers with an outstanding return on their investment,” said Nicole Wong, associate general counsel at Google, in a statement.

The decision isn’t surprising, considering Judge Griffin had given preliminary approval earlier this year to the settlement of the nationwide class-action lawsuit filed by lead plaintiff Lane’s Gifts and Collectibles against Google and other Internet companies.

But Google can expect a challenge to this settlement. Shawn Khorrami, a Los Angeles-based attorney who represents advertisers in click-fraud lawsuits, said he is part of a legal team representing a member of the class who objected to the settlement and who plans to appeal the ruling.

“It’s definitely, by far and away, the most absurd settlement we’ve ever seen. It’s a shame any judge would put a stamp of approval on it,” Khorrami said.

In the lawsuit, Lane’s Gifts alleged being overcharged for online ads due to click fraud, which occurs when someone clicks on a pay-per-click ad with malicious intent.

For example, a company official may click on competitors’ ads to increase their ad spending, or a publisher may click on his website’s ads to increase his commissions. Estimates about click-fraud incidence vary, with some putting it as high as 20 percent of all clicks.

The February 2005 lawsuit includes other Internet companies like Yahoo and AOL, which haven’t settled. Lane’s Gifts and the class, excluding a number of plaintiffs who objected to the agreement, settled with Google for $90 million. A third of that amount will go to pay attorneys’ fees and the rest as credits to affected advertisers who can certify click-fraud instances. The credits can be applied toward future ads purchased from Google.

The class, which Judge Griffin also certified in his final order, includes buyers of Google online ads between Jan. 1, 2002, and Wednesday. In the settlement, Google denied the plaintiffs’ claims and didn’t admit to any wrongdoing or legal liability.

The judge wrote that 556 potential members of the class opted out of the settlement. By opting out, these advertisers lost their chance to claim credits as part of the settlement but retained their ability to pursue click-fraud litigation against Google. The members of the class, on the other hand, are, according to the judge’s order, “forever barred and permanently enjoined” from suing Google over click fraud.

In this week’s hearing, the judge heard objections from plaintiffs who complained that the settlement amount was too small, that too much money will go to attorneys and that the agreement puts too much of a burden on affected advertisers to prove click fraud.

Joseph Kinney is suing Google and Lane’s Gifts in this same Arkansas court to have the now-final settlement dismantled. In his lawsuit, Kinney asked the court to declare Lane’s Gifts as not adequately representing the nationwide class of plaintiffs. He also asked for a temporary and permanent injunction blocking the settlement.

Khorrami, who is part of the legal team representing Kinney, said the settlement’s approval will not deter Kinney from pursuing his lawsuit.

As part of the settlement, a New York University computer science expert conducted an independent examination of Google’s click-fraud detection methods. The expert, Alexander Tuzhilin, concluded that Google is making a “reasonable” effort to fight click fraud.

By Juan Carlos Perez, IDG News Service (Miami Bureau)