• by Wendy Davis  @wendyndavis, February 1, 2010

Several marketers sued Facebook for click fraud this summer, shortly after a flurry of complaints about the issue surfaced online. Now, Facebook is arguing that the litigation should be dismissed because its contract with marketers provides that they must pay for all clicks, regardless of their validity.

"Contrary to plaintiffs' allegations, the contract does not require Facebook to police its website for all instances of click fraud nor does it limit Facebook's ability to collect fees generated by clicks on plaintiffs' advertisements," Facebook alleges in a recent motion to dismiss the cases.

The litigation grows out of complaints filed by sports site RootZoo and several other online marketers. They filed suit shortly after TechCrunch reported on an influx of complaints by marketers about perceived click fraud on Facebook. The cases were consolidated into one litigation, currently pending in front of U.S. District court Judge Jeremy Fogel in the northern district of California.

Facebook alleges in its motion papers that all cost-per-click advertisers were required to check a box stating that they agreed to the company's terms and conditions, which allegedly included the following language: "I understand that third parties may generate impressions, clicks, or other actions affecting the cost of the advertising for fraudulent or improper purposes, and I accept the risk of any such impressions, clicks, or other actions."

Late last week, the marketers filed a response denying that the disclaimer was part of their contracts. They also said that the disclaimer is "ambiguous" and "strikingly inconsistent" with Facebook's advertising policies and statements. For instance, they argue, Facebook posts a glossary that says: "We have a variety of measures in place to ensure that we only report and charge advertisers for legitimate clicks, and not clicks that come from automated programs, or clicks that may be repetitive, abusive, or otherwise inauthentic."

While Facebook clearly has a motive to draft terms and conditions that aim to avoid liability, the strategy also seems likely to pose a public relations problem, says online marketing consultant Greg Sterling. "They're in a difficult spot," he says. "They have to say, 'We will fight click fraud,' but they don't want to make themselves vulnerable to damage claims -- which could be quite substantial."

Santa Clara University law professor Eric Goldman says that Facebook's agreement with marketers appears to be clear, but adds that courts "often will consider additional documentation outside the 'four corners' of the contract." Facebook declined to comment for this article.