Microsoft Steps up the Click Fraud crackdown

Microsoft has sued Eric Lam, Gordon Lam and Melanie Suen over fraud related to pay-per-click advertisements. Filed in the court of Seattle, the civil suit names a Canadian citizen (Suen). Microsoft is suing for damages of $750,000.

After a yearlong investigation, this is the first suit filed by Microsoft. Microsoft was able to confirm the complaints made by concerned advertisers. These advertisers were noticing suspicious spikes in traffic to their ads. After investigation, Microsoft realized there were increased searches for terms such as “auto insurance quote” and click-throughs were exorbitantly high.

Although many advertising firms have complained in the past, this case is important because it is the first of its kind where a search engine actively goes after suspects of fraud. Tim Cranton, a lawyer for Microsoft said, “We have decided to become more active in the commercial fraud area on the enforcement side. The theory is you can change the economics around crime or fraud by making it more expensive.”

There is a push to incorporate more preventative measures to cut down on the reported 1 in 7 fraudulent clicks.

The paltry $750,000 claim (from the perspective of Microsoft) is meant more as taking a stand than actually recouping damages. By setting an example with the three suspects, Microsoft hopes to deter future pay-per-click schemes. As far as how effective this technique will be is unknown but we can get an idea from how the RIAA lawsuits over copyright infringement played out. They did not deter anything and, in many cases, they are still in court.

The case is filed and it will be interesting to see how it plays out. Maybe the court will better define the responsibilities search engines have to prevent this. On the other hand, they may actually set an example and deter future fraud clickers.