Google will forfeit some $500 million to the U.S. Department of Justice to settle claims it allowed Canadian online pharmacies to target U.S. customers.
Google (NASDAQ: GOOG) will forfeit some $500 million to the
U.S. Department of Justice in a bid to settle allegations it allowed Canadian
online pharmacies to target ads at U.S. consumers.
That $500 million represents the revenue Google apparently
received from the ads, which were delivered via AdWords, in addition to the
revenue those pharmacies collected from domestic buyers. Shipping prescription
drugs to U.S. customers from outside the country is a violation of the Federal
Food, Drug and Cosmetic Act and possibly the Controlled Substances Act, the
latter depending on the drugs in question.
"The Department of Justice will continue to hold accountable
companies who in their bid for profits violate federal law and put at risk the
health and safety of American consumers," Deputy Attorney General James M. Cole
wrote in
an
Aug. 24 statement. "This settlement ensures that Google will reform its
improper advertising practices with regard to these pharmacies while paying one
of the largest financial forfeiture penalties in history."
According to
the Department of Justice, Google spent a roughly six-year period (from
2003 to 2009) assisting some Canadian online pharmacies with placing and
optimizing AdWords ads. The company became aware of a federal investigation in
2009, after which it moved to prevent those online pharmacies from advertising
for U.S. customers. The search-engine giant began requiring online pharmacy
advertisers certify themselves with the National Association of Boards of
Pharmacy's Verified Internet Pharmacy Practices Sites program. It also employed an independent company to sniff
out those pharmacy advertisers who might try to subvert Google's own
advertising safeguards.
Under the terms of the agreement reached by Google and
federal authorities, the former apparently agrees to acknowledge it "improperly
assisted" those online pharmacies in running advertisements via AdWords, and
institute unspecified compliance and reporting measures. Google is also
required to accept responsibility for its conduct.
For its part, Google seemed anxious to put the whole matter
in the past as quickly as possible. "We banned the advertising of prescription
drugs in the U.S. by Canadian pharmacies some time ago," a Google spokesperson
told
The
Wall Street Journal. "However, it's obvious with hindsight that we
shouldn't have allowed these ads on Google in the first place. Given the
extensive coverage this settlement has already received, we won't be commenting
further."
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