Microsoft Files 2 Lawsuits Alleging Online Ad Fraud

Microsoft filed two separate lawsuits the week of May 17 describing an emerging form of fraud affecting online advertising.

The lawsuits, filed in the U.S. District Court for the Western District of Washington, accuse a company called RedOrbit and unnamed defendants of being involved in click fraud-related activity Microsoft calls "click laundering."

"Online ad fraud is evolving in sophistication all the time," Brad Smith, senior vice president and general counsel for Microsoft, said in a statement. "Fighting it demands vigilance and dedication to an honest and secure online marketplace. We believe that a trusted marketplace is critical to Internet commerce, and Microsoft will continue to take aggressive action working with industry and law enforcement to protect our platforms, customers and advertisers."

According to Microsoft, click laundering makes invalid ad clicks appear to originate from legitimate sources. After click fraudsters trick unsuspecting users into visiting Websites and unknowingly clicking on advertisements, click laundering can disguise the origin of the invalid clicks by using scripts and other methods to dodge fraud detection systems.

The activity detailed in the lawsuits was uncovered, according to Microsoft, after a dramatic and irregular growth in click traffic on two sites within Microsoft's AdCenter network. Often botnets are powering click fraud scams, as indicated by research from Click Forensics that tied botnets to more than 40 percent of all click fraud in the third quarter of 2009.

Microsoft described the suits as part of an ongoing attack on threats to the online advertising ecosystem. Earlier the same week, the company settled a lawsuit filed in 2009 involving allegations of click fraud in auto insurance verticals and the "World of Warcraft" online game. Terms of the settlement are confidential, but Microsoft described the settlement as successful.