The War on Click Fraud

[Luke_Wilbur]

Here is a wonderful email that was sent to me about Click Fraud. Advertisers beware of that your competitors might be clicking your link and costing you money. We were thinking about doing that revenue model for DCpages, but after reading this article we are reconsidering our direction.

 

Click fraud occurs in pay per click online advertising when a person, automated script or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating an improper charge per click. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud whether they like it or not.

 

Use of a computer to commit this type of fraud is a felony in many jurisdictions, for example as covered by Penal code 502 in California and the Computer Misuse Act 1990 in the United Kingdom. There have been arrests relating to click fraud with regard to malicious clicking in order to deplete a competitor's advertising budget.

 

In 2004, a California man created a software program that let spammers defraud Google out of millions of dollars in fraudulent clicks. Authorities said he was arrested while trying to blackmail Google for $150,000 to hand over the program.

 

Pay per click advertising or PPC advertising is an arrangement in which webmasters (operators of web sites), acting as publishers, display clickable links from advertisers, in exchange for a charge per click. As this industry evolved, a number of advertising networks developed which acted as middlemen between these two groups (publishers and advertisers). Each time a (believed to be) valid web user clicks on an ad, the advertiser pays the advertising network, who in turn pays the publisher a share of this money. This revenue sharing system is seen as an incentive for click fraud.

 

Click fraud can be as simple as one person starting a small web site, becoming a publisher of ads, and clicking on those ads to generate revenue. Oftentimes the number of clicks, and their value, is so small, that the fraud goes undetected. Frequently publishers will claim small amounts of such clicking is an accident, which is often the case.

 

Much larger scale fraud also occurs. Those engaged in large scale fraud will often run scripts which simulate a human clicking on ads in web pages. However, huge numbers of clicks appearing to come from just one, or a small number, of computers, or single geographic area, look highly suspicious to the advertising network and advertisers. Clicks coming from a computer known to be that of a publisher also look suspicious to those watching for click fraud. A person attempting large scale fraud, alone in their home, stands a good chance of being caught.

 

Organized crime can handle this by having many computers with their own internet connections in different geographic locations. Often scripts fail to mimic true human behavior, so organized crime networks use Trojan code to turn the average person's machines into zombie computers and using sporadic redirects or DNS-cache-poisoning to turn the oblivious user's actions into actions generating revenue for the scammer.

 

Impression fraud is an insidious variant of click fraud in which the advertiser is penalized for having an unacceptably low click-through rate for a given keyword. This involves making numerous searches for a keyword but without clicking of the ad. Such keywords are disabled automatically, enabling a competitor's lower-bid ad for the same keyword to continue while several high bidders (on the first page of the search results) have been eliminated.

 

It is very difficult for advertisers, advertising networks, and authorities to pursue cases against networks of people spread around multiple countries.

 

Disputes over the issue have resulted in a number of lawsuits. In one case, Google (acting as both an advertiser and advertising network) won a lawsuit against a Texas company called Auction Experts (acting as a publisher), which Google accused of paying people to click on ads that appeared on Auction Experts' site, costing advertisers $50,000. Despite networks' efforts to stop it, publishers are suspicious of the motives of the advertising networks because the advertising network receives money for each click, even if it is fraudulent.

 

Here is a very good article in the Wall Street Journal that discusses the subject:

 

http://startup.wsj.com/ecommerce/ecommerce...10-delaney.html