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In February 2005, a suit was brought against Google in Arkansas. Filed by Lane's Gifts as a class action lawsuit, the suit alleged that Google had made billions by charging advertisers for fraudulent clicks on their AdWords network. Click fraud is an enormous problem for the pay-per-click market with reports that anywhere from 12 percent to as much as 50 percent of clicks on PPC ads are fraudulent in nature. Even at the lowest estimate this accounts for billions in earnings for the search engines at the cost of advertisers. However, the settlement for the class action lawsuit was measured in the millions and not the billions. What went wrong and what can advertisers do to avoid being trapped by this settlement?

This article is reprinted from the Bruce Clay, Inc. blog.

Thirty Pieces of Silver: How Lane's Gifts lawyers sold out

Thirty Pieces of Silver: How Lane's Gifts lawyers sold out

by: Bruce Clay, May 2006

The continued furor over the $90 million click fraud settlement exposes a truth that must be acknowledged. The advertisers who were wronged by click fraud through AdWords had insult added to injury by the pitiful and inadequate settlement accepted by the Lane's Gifts and Collectibles lawyers on the behalf of all class action case participants. All participants were cheated of their rightful settlement and those responsible must be called to task for it. I think this settlement is an insult for both the trivial financial compensation allotted and the absence of any provision requiring Google to fight click fraud in their network. By the terms of this settlement, Google gets to continue to make money on fraud.

I have no issue with Google admitting there was fraud - it happened. I have no issue with Google having the business sense to settle when they learned they could - settling was very good business for Google and I think that most of us (were we in that position) would have tried that path ourselves. Google's offer was the one that made the most business sense for their company and their stockholders. For Google, it was the right move.

However, as good as the offer was for Google, it was terrible and insulting to the class action participants. While we cannot know the motivations of the lawyers in the case, one fact is clear: the proposed settlement should have been rejected by the lawyers that opened the case as a class-action suit. Instead, when faced with having it thrown out for not being in the correct jurisdiction, the lawyers settled, perhaps so that they could take their tens of millions of dollars out of the settlement amount, effectively placing their own financial interests above those they represented in the case. In essence, they would be settling in order to make millions instead of making nothing if the case were dismissed.

I have an issue with the lawyers not representing the best interests of their class action participants and settling for their own personal profit. In failing to secure a settlement that would fairly compensate advertisers for the fraudulent clicks on their ads and stop continuing fraud, the lawyers in this case have chosen a path leading to personal profit over the responsibility to their clients and the many class action advertisers they represented.

The settlement fee is an insult to everyone involved (except the lawyers) and we all know it. If the lawyers were doing the best thing for their class action clients by accepting a trivial compensation and without requiring Google to take any action to restrict future fraud activity in any way, then I just do not see it. I do not agree that this is a fair and equitable settlement.

I urge everyone to object to the settlement by writing to the court and specifically objecting to the proposed settlement. The case should have gone to trial, or these lawyers should have withdrawn, or they could have filed in California themselves. Stopping future fraud is just as important as compensation for the damage already done, and that was not a part of the settlement. None of these options were taken and so every affected advertiser must take a stand.

For sample letters to object to the manner and amount of this settlement as well as to exclude you or your company from the class action lawsuit, please follow the links below. Note that the objection letter must be sent to all three addresses included in the file.

Exclusion Letter
Objection Letter