Google Click Fraud Settlement Hits Snag

Lawyers representing several Internet search advertisers who use Google's AdWords service have filed suit hoping to block a proposed $90 million settlement over allegations of click fraud. The plaintiffs claim that the settlement does not adequately compensate those affected.

"Advertisers must decide: take the pennies offered by Google and be happy with the status quo or opt out and pursue legal restitution through a lawsuit," Dylan Pollard, a Los Angeles-based plaintiffs' click fraud attorney, said earlier this week. "Either way, they don't have much time to decide."

On Thursday, they made the decision to file suit in the same Arkansas court that the original settlement was reached. A judge is set to hear arguments in a two-day hearing July 24 to decide on whether to approve the settlement.

Click fraud occurs when a person displaying advertising on their Web pages either manually or automatically clicks a link repeatedly in order to generate revenue. The advertiser is then forced to pay for these false leads.

While Google does not directly participate, the plaintiffs argued that the company does too little to prevent it from occurring. The settlement gave $60 million in advertising credits, and a staggering $30 million to be used for lawyer fees. No cash would be given as part of the payment.

Pollard has teamed up with another click fraud lawyer, Shawn Khorrami, to start a Web site that helps Google advertisers opt out of the proposed settlement. It is hoped that enough plantiffs would opt out that it would cause the judge to throw out the initial settlement.

"To try to obtain compensation from past click fraud abuses with Google, advertisers need to be pro-active. To start the process, they must opt out of the proposed settlement," Kohorrami argued.

Furthermore, Google could legally get away with paying as little as a half percent of total losses. Thus, a $10,000 click-fraud loss could theoretically be settled for as little as a $50 advertising coupon.

Google called the lawsuit inappropriate, and questioned its motives. "We question if this lawsuit may be motivated more by the quest for attorneys' fees than pursuit of what's best for class members," the company said in a statement.