Judge Green-Lights Class-Action Against Citysearch

Barry Diller

Dealing a blow to IAC, a federal judge has decided that disgruntled online marketers can proceed with a class-action click-fraud lawsuit against the company.

U.S. District Court Judge Christina Snyder in Los Angeles ruled that the search marketers could be certified as a class because their complaints against IAC stemmed from the same type of alleged conduct.

"Plaintiffs advertised using Citysearch's pay-per-click advertising program and were allegedly charged by Citysearch for invalid clicks," Snyder wrote. "Notwithstanding any asserted differences between class members, plaintiffs' claims are based on an alleged common course of conduct."

The class includes all pay-per-click marketers on Citysearch who "experienced click fraud by reason of double clicks" -- clicks within a short period of time from the same IP address -- or from Citysearch's "failure to apply automatic filters to traffic from its syndication partners" before March 23, 2007.

Barry Diller's IAC had opposed the marketers' efforts to proceed as a class, arguing that "each advertiser's expectations of and experience with Citysearch are unique."

This decision appears to mark the first time a judge has ruled on a contested motion to certify a class in a click-fraud lawsuit stemming from pay-per-click ads. While Google and Yahoo have both faced class-action click-fraud lawsuits, those cases were resolved without litigation about whether a class should be certified, according to attorney Brian Kabateck. He represents the marketers in the lawsuit against IAC, and has also represented search marketers in class-actions against Google and Yahoo.

Whether a class can be certified is key in these types of cases because individual marketers' damages from click fraud are usually too small to justify the expense of suing, unless they can proceed as a class.

The two advertisers who brought the case, make-up services company Menagerie Productions and payroll company Redwolf, alleged that they were billed for clicks that were "invalid." They said that in some cases, Citysearch charged them for more than one click from the same IP address in a short period of time. They also alleged that IAC did not apply filters to screen out suspicious clicks.

Menagerie alleged that it shelled out $1,900 in a three-month period for pay-per-click ads on Citysearch without receiving any new clients. Redwolf said it paid $700 over a five-month period and also didn't see any new business as a result of the ads.

Kabateck said the case could go to trial next year, unless it settles. "Hopefully, Citysearch will make things right with their customers," he said.

2 comments about "Judge Green-Lights Class-Action Against Citysearch".
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  1. Timothy Locklear from American Effect New Media, November 19, 2009 at 4:19 p.m.

    OK... my first question is... who in their right mind would have advertised on CitySearch in the first place? CS has long been on my radar... always as an irrelevant nuisance in Web searches... never as a valid tool by any stretch of the imagination. As for the amounts paid by the advertisers... $1900 and $700... I'm sorry, but these are relatively low amounts when you're talking about PPC advertising. And, as with any advertising... you cannot judge effectiveness based on not getting any immediate business. Six months from now, when someone needs a payroll company... they may remember seeing that Redwolf ad online and contact the company through offline methods.

    This all seems very ridiculous. These companies were silly for advertising with CitySearch in the first place, in my professional opinion... but they are even more silly for getting mad about the lack of response and an imperfect ad system. CitySearch probably does have a crappy ad system, but this whole case seems to be completely disregard any advertiser responsibility for making a bad purchase decision.

    Doesn't this also open the door for smaller Web sites to be sued for imperfect ad systems? Think of the newspapers, blogs, etailers... all who operate their own proprietary ad systems... all who could now be exposed to legal action because of this case.

    People need to face the fact that advertising will never be a perfect science. It's a gamble... always will be.

  2. Mike Stewart from Webformance Inc., November 19, 2009 at 8:32 p.m.

    Best thing that CitySearch has to offer is the free backlinks....

    PPC etc without Analytics is retarded. Folks that do PPC without analytics are uneducated by sales reps who are not responsible for the clients satisfaction.

    The yellow page duopoly is over. Google deserves a monopoly due to the checks and balances and lack of cronyism. Main Street fights back against greedy margins that the Yellow Pages have had for years. Keep the trust with your clients and innovate!

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