“Bigreds.com accuses the search engine of participating in one of the multi-billion dollar search marketing industry’s dark secrets.”
Online retailer Bigreds.com that used a pay-per-click advertising service operated by Yahoo is suing the Internet giant for more than $1 million, alleging that it was overcharged by thousands of dollars as a result of click fraud that Yahoo did little to prevent, according to court documents.
Brooklyn, N.Y.-based Bigreds, which sells collectibles online, stated that between 2002 and 2006, it paid Yahoo’s Search Marketing unit, previously known as Overture Services Inc., a pay-per-click advertising service acquired by Yahoo in 2003, more than $900,000 between 2002 and 2006 for the number of clicks that Bigreds ads received on sites affiliated with Yahoo and Overture.
“Bigreds seeks more than $1 million in damages and penalties.”
Pay-per-click is an advertising system in which advertisers agree to pay an amount each time a user clicks on their ads in the search results.
Bigreds asserts that many of the clicks that came were not from genuine buyers but from affiliate Web sites operated by Overture and Yahoo who received commissions based on the number of clicks their sites generated for advertisers.
According to the court papers, Yahoo and Overture were aware about the alleged fraudulent clicks in 2006 but did nothing about it even though the companies had the technology to remedy the situation. According to the lawsuit, Overture offered Bigreds $17,000 for admitted “bad clicks” billed to the company from April 28, 2006, to June 28, 2006.
“These clicks were not actual traffic, but were deceitful clicks,” Bigreds declares in court papers filed earlier this month in U.S. District Court in New York. “Affiliates of Overture used software programs, employed people, and/or directed people other than actual customers to click on plaintiffs links from keyword search results,” the complaint states.
“Yahoo acquired Overture, which launched in 1998 as GoTo.com, in 2003.”
Bigreds is claiming more than $1 million in damages and penalties. Yahoo has yet to file a formal response to the allegations.
Click fraud is one of the multi-billion dollar search marketing industry’s sinister secrets. Almost all major players, including Yahoo, Microsoft and Google, have admitted the problem. Critics debate that search engines have little motivation to police the practice because much of their revenue is generated by ad clicks.
“Yahoo in 2005 paid $4.5 million to settle a click fraud class action lawsuit. Google paid $90 million to settle a similar suit in 2006.”
“Yahoo said it had no comment on the lawsuit.”