Some Plaintiffs Fight Google Settlement

By JILL ZEMAN

TEXARKANA, Ark. – A set of plaintiffs in a class-action suit argued Monday that Google has not exercised reasonable care to prevent "click fraud" and has misrepresented efforts to stop swindlers from repeatedly clicking Web site links to drive up advertising costs.

The arguments came as an Arkansas judge considers whether to accept a $90 million settlement offer from Google Inc. A Texarkana company – Lane’s Gifts and Collectibles – filed the lawsuit, which Miller County Circuit Judge Joe Griffin certified as a class action.

Plaintiffs say Google has not done enough to stop click fraud, which drives up advertisers’ bills by falsely indicating the number of Web users who have "clicked" on an Internet ad to seek more information about a product.

Clicking on the ads, typically displayed at the top and sides of Web pages, triggers sales commissions even if the activity doesn’t lead to a sale. Click fraud cropped up several years ago as a way to drain advertising budgets or funnel illicit revenue to Web sites that belong to Google’s network.

"Google has a duty, in our view, to exercise reasonable efforts to filter invalid clicks," said Attorney Steve Malouf, who represents many of the plaintiffs.

The settlement calls for $30 million in attorney’s fees with the remaining $60 million distributed as Google advertising credits. No advertiser will receive cash.

Fifty-one plaintiffs have raised objections, mostly smaller advertisers who say the deal unfairly shifts to them the burden of proving their losses and that they don’t have the resources to easily pursue their claims.

"I am a small Google advertiser and a believer that I have been forced by Google to pay for bogus clicks to my site I manage for my consulting clients. The proposed settlement fails to address our damages and the damages of those in my situation," Galen Workman of Ozdachs Consulting in San Francisco wrote to the court.

"The settlement is a sweetheart deal among large companies and their attorneys. It is in the interest of justice that it be thrown out," Workman wrote.

In a court filing, Google said 10 objections were lodged by class members who live outside the United States and "who presumably lack familiarity with the American legal system."

Google has said the settlement is fair, but notes that the lawsuit’s merit is still "heavily disputed."

"Those who object to the amount of the settlement merely assume that undetected ‘click fraud’ is pervasive, and that they could prove this at trial," the court filing said. "But Google contents that class members could never prove such a claim, because Google aggressively roots out click fraud, using highly sophisticated techniques and processes, and minimizes any impact it has on advertisers."

The hearing is expected to last two days.

An independent report filed in court last week said while Google appears to be doing reasonably well protecting advertisers from scam artists preying upon Internet advertisers, it remains unclear how much the system is being bilked by click fraud.

Since 2001, the ads have generated $15.7 billion in revenue for Google and its partners, turning the Mountain View, Calif.-based company into one of the world’s most prized businesses.

Shares of Google rose 79 cents to close at $390.90 on the Nasdaq.