Microsoft goes to court over click fraud
Microsoft is suing three people for click fraud: repeatedly clicking on adverts simply to waste the advertiser’s money. The case, aimed at a relatively small-scale operation, appears to be both a warning and a test of the law.
The accusations involve paid adverts which appear alongside results on Microsoft’s search engines. Firms bid to get top billing in these adverts and then pay the amount stated in their bid each time somebody clicks on the advert.
According to the Wall Street Journal, last year several firms which placed adverts for auto insurance complained that the number of clicks they were getting had risen suspiciously quickly. Microsoft claims its investigations show the defendants, Eric and Gordon Lam and Melanie Suen, were responsible for the bogus clicks, using a proxy server in a failed attempt to make it appear as if the clicks were legitimate and coming from different computers.
Microsoft believes the defendants, who had placed lower bids for the same phrases, were attempting to use up the legitimate advertisers’ quotas. Firms placing ads with Microsoft agree to a maximum budget (usually monthly) and once this is used up, the ads are removed from results and the next highest bidder moves to the top of the list.
It’s also claimed the defendants were placing the ads to gather lists of potential clients which they then sold on to insurers. Eric Lam was apparently carrying out a similar scam with adverts relating to World of Warcraft. The connection isn’t yet explained but it appears he was simply gathering contact details from people who clicked on the site. That would have some value to auto insurers, but not as much as details from people who were specifically looking for insurance information.
If the claims are true, and the defendants are forced to meet Microsoft’s claims in full, they may still be getting off relatively cheaply. Microsoft is asking for damages of $750,000 (three times the estimated profits that the defendants made from the scam), but it has already had to pay $1.5 million to advertisers as refunds for the bonus clicks.
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