An e-commerce site has filed a lawsuit against several search engines including Google and Yahoo, alleging that they knowingly overcharged for pay-per-click online advertising — a method of advertising that involves the payment of a fee every time a user clicks on an advert.
Lane's Gifts and Collectibles, an US-based gift shop that advertises on the Internet, claims that search engines colluded to overcharge advertisers, according to the Associated Press. It plans to represent various other companies in a class-action lawsuit against over 10 Internet companies, including Yahoo, Google, America Online, Ask Jeeves, Lycos, Looksmart and Findwhat.
The search engines have "grown the Internet PPC [pay per click] advertising market while failing to disclose that they have routinely and systematically overcharged and-or overcollected for PPC advertising revenue from their customers," the plaintiff claimed.
Click fraud is an increasing concern in the industry, with 70 percent of search engine advertisers worried about it, according to a recent survey by SEMPO, an organisation that promotes search-engine marketing.
Although search engines are accused of not doing enough to tackle the problem of click fraud, the actual perpetrators of the fraud are thought to be competitors of online advertisers, who increase a rival's advertising bill by repeatedly clicking on ads, or the content partners of search engines which receive commission from fraudulent clicks.
Last year, Google's chief financial officer George Reyes told an investor conference that click fraud is the biggest threat to the Internet economy, according to CNN.com.