Microsoft Sues Three For Click Fraud
By Anna Johnson on June 23rd, 2009After a year-long investigation, Microsoft has brought a lawsuit against Eric Lam, Gordon Lam and Melanie Suen, of Vancouver, British Columbia (along with related companies and other parties) alleging they engaged in click fraud.
Microsoft has brought the civil action in the United States District Court in Seattle. The company is seeking at least $750,000 in damages, alleging the defendants were responsible for unlawfully clicking on ads for auto insurance and World of Warcraft on Microsoft’s search engine results pages.
The alleged click fraud came to light in early 2008 when several auto insurance and World of Warcraft related advertisers complained to Microsoft that traffic to their ads had jumped suspiciously. Microsoft traced the suspect traffic for both types of ads to different computers, but the same proxy servers (which mask the original IP address of a click).
Microsoft attempted to stop the culprits by blocking servers or a certain level of traffic for the ads in question. However, the wrongdoers (like many tech criminals who would serve themselves and the world much better if they applied their creativity for good) simply found new ways to get around Microsoft’s fixes.
It was when Microsoft discovered that Eric Lam was not only a World of Warcraft advertiser, but also ran an auto insurance site, that Microsoft began to put the pieces together.
Indeed, further investigation revealed that seven different accounts, registered under different individual and company names, were all linked to Eric Lam, his brother Gordon Lam, and their mother Melanie Suen.
Based on its investigation, Microsoft now believes Eric Lam was clicking on his competitors’ sites to exhaust their pay-per-click budgets and allow his lower-ranking ads to be listed higher in the paid search results.
When people clicked on his ads, he collected information which he then sold to auto insurance companies, making him an estimated profit of $250,000.
Microsoft’s case marks the first time a search engine company has sued someone for click fraud.
Many involved in pay-per-click advertising have complained that the search engines have been lax in pursuing those allegedly responsible for click fraud because of the financial incentive to allow the fraud to continue.
In this case, however, Microsoft found itself crediting advertisers $1.5 million in search fees… so it seems that defrauded advertisers are increasingly demanding that the search engines share the cost.
Recently, Kikabink News published statistics which showed click fraud was on the rise. If so, and given that the search engines are starting to bear the cost as well as defrauded advertisers, this may not be the last time we see a major search engine sue someone for click fraud.
Source: Stephanie Clifford, “Microsoft Sues Three in Click-Fraud Scheme,” The New York Times, June 15, 2009
