Advertisers Opting Out of Google's $90M Click Fraud Settlement

By Ben Charny  |  Posted 2006-05-11 Print this article Print

There's anecdotal evidence suggesting that hundreds of Google advertisers will object to Google's proposed payment of $90 million to settle a click-fraud class action lawsuit in Arkansas, according to an attorney involved in the case.

The exact number won't be known until around June 15. That's when the 30-day period ends for Google advertisers to opt out of the settlement. By opting out, advertisers do not get reimbursed by Google in anyway.

Advertisers can formally withdraw only when they receive official word of the settlement from Google. The search giant's expected to begin sending those letters or emails as early as Monday.

There's been a flurry of protest over the settlement starting in the last few weeks, which suggests hundreds of advertisers are planning to opt out.

Attorney Brian Kabateck, representing another business suing Google for alleged click fraud in California, went so far as to issue a news release in April making his objections known.

Kabateck said his office has since received hundreds of calls and e-mails from Google advertisers requesting information on opting out of the Arkansas settlement. Also, traffic has been relatively heavy at a Web site to distribute opt-out information.

This all leads Kabateck to conclude the number of those objecting is "going to be a sizable amount" perhaps in the thousands.

It remains to be seen, however, if that's enough to force a change of heart by the judge hearing the case.

The hubbub is over a lawsuit filed in a Texarkana, Ark., circuit court by local retailer Lane's Gifts & Collectibles, which was a Google advertiser.

The firm accused Google and other top Internet companies of improperly charging advertisers. The suit is a class action, and plaintiffs represent any Google advertiser from 2002.

The litigation seeks compensation for click fraud, which, loosely defined, is when marketers, spammers or other black hats artificially inflate the number of times a Web site ad is clicked on, thus improperly increasing Google's ad revenues. Advertisers pay Google a fee every time their ads are clicked on.

Meanwhile, Google executives have claimed as recently as April 10 that click fraud isn't a problem at Google.

Kabateck believes when compared to how much Google allegedly overcharged, the entire settlement doesn't work out to anywhere near enough compensation per advertiser. Some have been allegedly overpaying by tens of thousands of dollars, but will only get a few hundred dollars back as a result of the settlement, Kabateck says.

The $90 million is "manifestly deceptive in size, scope and effect," his law firm wrote in a letter to the judge in the case. |

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