Microsoft Taking Click Fraud Battle To Court

The New York Times reports that Microsoft is taking the click fraud battle to court.

“Microsoft filed the civil complaint on Monday in United States District Court in Seattle against Eric Lam, Gordon Lam and Melanie Suen, of Vancouver, British Columbia, along with several corporation names they were believed to have used, and several unnamed parties.”

The Times quotes Tim Cranton, a Microsoft attorney, who says they’ve decided to get more active in fighting fraudulent clicks on web ads. “The theory is you can change the economics around crime or fraud by making it more expensive.”

The lawsuit stems from auto insurance advertisers, who complained as far back as March 2008 about unusual spikes in paid traffic. The Times says Microsoft investigated those complaints and found similar oddities in other paid ads, including those related to the World of Warcraft game. Their investigation ultimately led to the defendants, who refused to comment for the Times’ article.

The Times does explain what Microsoft thinks the defendants were doing:

“Microsoft’s theory is that Mr. Lam was running or working for low-ranking sites that took potential client information for auto insurers. The complaint said that he directed traffic to competitors’ Web sites so they would pay for those clicks and exhaust their advertising budgets quickly, which let the lower-ranking sites that he sponsored move up in the paid-search results.”

Microsoft seeks at least $750,000 in damages.

Click fraud has been estimated to affect as many as 17% of paid clicks, but search engines have disagreed with those estimates.