Pay-Per-Click Fraud Exposed

Has anyone else noticed a disturbing pattern in your pay-per-click advertising campaign, of the same IP addresses clicking on your ad, spending one or two seconds on your website and then leaving?

That's called click fraud and it's a major problem among all of the pay-per-click search engines.

Click fraud is a scheme that takes advantage of online advertising programs like those offered by Google, Yahoo/Overture, Findwhat and others. A fraudulent website is set up and participates in programs like Google's AdSense program. Unlike legitimate websites that attract human visitors to the site, fraudsters use software "hitbots" or employ boiler-rooms of low-wage employees from other countries to generate clicks on ads, and then collect commission from pay-per-click programs.

In June, a federal grand jury returned an indictment against Michael Anthony Bradley 32, of Oak Park California who was charged with fraud and extortion for a scheme involving Google's pay-per-click program. Believe it or not, Bradley actually tried to extort Google into paying $100,000 for click fraud software he created called "Google Clique."

Click fraud hurts advertisers by driving up the cost of each click because many online advertising programs adjust the price of each click based on the popularity of a particular keyword and the number of competing advertisers. And depending on how popular your keyword is, it can take just a few minutes to register hundreds of clicks. Click fraud can quickly deplete your pay-per-click account and leave you with little or nothing to show for your expentiture.

In a recent filing to the Securities and Exchange Commission, Google acknowledged, "We are exposed to the risk of fraudulent clicks on our ads. We have regularly paid refunds related to fraudulent clicks and expect to do so in the future. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks, we may have to issue refunds retroactively of amounts previously paid to our Google Network members."

Now, in all fairness to the pay-per-click companies I've used in the past, I have to give credit where credit is due. Whenever I complained of click fraud, which was often, all of the pay-per-click companies, without exception, did the right thing and credited the stolen funds back into to my account. Ironically, I have not had a click fraud problem with Google.

You can reduce your risk of being victimized by click fraud, by regularly auditing your website