Court Considers Google Click Fraud Settlement

A federal judge in Arkansas is expected to begin a hearing today to determine whether to approve Google's offer to settle a click fraud class-action lawsuit by paying up to $30 million in attorneys' fees and $60 million in ad credits.

Google agreed to settle the case--brought by Lane's Gifts and Collectibles--in March, but at least 51 objections have been filed against proposed settlement.

One of the lawyers who is challenging the settlement, Darren Kaplan of Atlanta, has said in court papers that the settlement isn't structured fairly. He has said in court papers that marketers will only receive ad credits for a fraction of the amount of money they have lost to fraudulent clicks.

Kaplan was involved in negotiating a class-action click-fraud settlement with Yahoo last month. In that deal, Yahoo agreed to give advertisers the option of cash rebates for payments for invalid clicks, as opposed to Google's promise to give ad credits for a percentage of the overpayment.

In preparation for today's hearing, an independent expert filed a report with the federal district court that concluded that Google's efforts to combat click fraud are "reasonable."

But the 47-page report, by New York University professor Alexander Tuzhilin, also noted that pay-per-click advertising comes with some intrinsic problems that don't lend themselves to easy solutions. For instance, he wrote, Google and its advertisers clash about how much information Google is willing to provide about paid clicks. Marketers want an accounting of all clicks they are charged for and the precise time of those clicks, but Google will only tell them how many clicks they are charged for on any one day.

"This is a source of contention and dispute between Google and the advertisers," Tuzhilin wrote. "On one hand, the advertiser has the right to know why a particular click was marked as valid by Google (when the advertiser thinks that it is invalid) because the advertiser pays for this click. On the other hand, if Google discloses this information, it opens itself to click fraud on a massive scale because, by doing so, it provides certain hints about how its invalid click detection methods work."

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