Do you know what click fraud is? It just cost Google ninety million bucks.
Google has agreed to pay $90 million to settle a lawsuit alleging the online search engine leader overcharged thousands of advertisers who paid for bogus sales referrals generated through a ruse known as "click fraud."
The proposed settlement, announced by the company Wednesday, would apply to all advertisers in Google's network during the past four years. Any Web site showing improper charges dating back to 2002 will be eligible for an account credit that could be used toward future ads distributed by Google.
Mountain View, Calif.-based Google makes virtually all of its money from text-based advertising links that trigger commissions each time they are clicked on. Besides enriching Google, the system has been a boon for advertisers, whose sales have been boosted by an increased traffic from prospective buyers.
But sometimes mischief makers and scam artists repeatedly click on specific advertising links even though they have no intentions of buying anything. The motives for the malicious activity known as click fraud vary widely, but the net effect is the same: advertisers end up paying for fruitless Web traffic.
The lawsuit alleged Google had conspired with its advertising partners to conceal the magnitude of click fraud to avoid making refunds.
The frequency of click fraud hasn't been quantified, causing some stock market analysts to worry Google's profits will falter if it turns out to be a huge problem.
Google executives have repeatedly said the level of click fraud on its ad network is minuscule — a contention that the proposed settlement amount seems to support.
The $90 million translates into less than 1 percent of Google's $11.2 billion in revenue during the past four years.