Internet Click Fraud Put to Legal Test

06 April 2005

Internet advertising 'click fraud' is threatening to become a major legal issue as a small US retailer sues major search engine players.

A test lawsuit has been filed by Arkansas-based Lane's Gifts & Collectibles. It alleges the internet titans - including Time Warner and its America Online unit; Ask Jeeves; Walt Disney Company's online subsidiary; Lycos; LookSmart and - knowingly overcharged for ads they sold and conspired with each other to continue doing so.

Fraud can occur when advertisers pay search engines for each click on their ad, at around 50 cents (€0.38, £0.26) a shot. Fraudsters use software programs to automate the clicking, thereby running up charges for rival advertisers.

Internet firms acknowledge click fraud to be a problem but refuse to quantify it.

The companies at the centre of the lawsuit have so far refused to comment, with the exception of Ask Jeeves which said tersely: "We intend to defend this lawsuit vigorously."

Data sourced from Wall Street Journal Online; additional content by WARC staff