Microsoft sues for click fraud

Microsoft has filed a lawsuit against three people accusing them of running a "massive" click fraud scheme. The scheme involved harnessing hundreds of thousands of computer IP (Internet protocol) addresses to target advertisers. These advertisers were promoting the World of Warcraft on-line game and automobile insurance.

The lawsuit focuses on a scheme to defraud competitors, by clicking on their on-line ads. Usually a percentage of these clicks resulted in sales, to cover the amount paid for the traffic.

In this instance of alleged click fraud, no sales were made. The victim companies lose money. This poor performance can also push the ads down in the rankings.

The complaint is filed against Eric Lam, Gordon Lam and Melanie Suen, of Vancouver, Canada alleging that they breached Microsoft's adCenter contract, by running a click fraud scheme along with other unnamed parties and several companies.

Microsoft's first lawsuit for click fraud, is asking the court for at least $750,000 US funds in damages.

A blog posting by Tim Cranton, Microsoft's associate general counsel states, "The on-line advertising industry has been making strides in this area for years, implementing technology, best practices and techniques to help address issues such as click fraud." Today’s action is one more step to expand that effort by utilizing the legal system to combat click fraud. Enforcement can play a critical safety role, supplementing technology and industry best practices, by using lawsuits and criminal prosecutions to stop the most egregious violators, and hold them accountable for the fraud they commit."

The investigation by Microsoft began on March 24, 2008, when it received an unusually high number of complaints regarding suspicious activity from auto insurance advertisers, that use its sites. What was suspicious was a large spike in the number of searches submitted, that exactly matched the keywords for which the insurance companies had bid. What followed was that within a short time, the top search results were being clicked. This was being done with hundreds of thousands of IP addresses being sued, to disguise where the traffic was really coming from.

This pattern of searches and clicks occurred on April 24 of the same year, targeting World of Warcraft advertisers. Microsoft tried to filter the traffic, with the result of seeing the characteristics change and then adjust its own filters. Again suspicious activities were detected in June, July and December of 2008.

The clicks in question, were linked to computers or servers run by Lam. Lam allegedly has links with both a World of Warcraft on-line store and auto insurance advertising.