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Microsoft Files First Lawsuit Against Click-Fraud

Microsoft has filed a lawsuite against three individuals in Vancouver, British Columbia – Gordon Lam, Eric lam and Melanie Suen plus several corporations and unnamed parties. In the said lawsuit, Microsoft seeks around $750,000 in damages.

The lawsuit was filed after Microsoft found out several patterns of click fraud done on its search pages. Sometime last year, the incidence of click fraud was reported to Microsoft by several auto insurance advertisers who noticed the sudden increase of visitors coming to their sites from paid ads running on Microsoft’s search pages.

After a thorough investigation Microsoft found out there the similar pattern was present in paids for World of Warcraft. They noticed that the traffic was coming from different computers but both are coming from two proxy servers.

Wondering why paid ads for auto-insurance and World of Warcraft are exhibiting similar click patterns, further Microsoft study revealed that the ads for World of Warcraft under the name of Eric lam is also redirecting traffic to auto-insurance web sites.

Some more investigation revealed the names of Eric Lam and his party.

Microsoft’s theory was a bit interesting. They said think that Eric Lam maybe related to a low-ranking site. But instead of competing head-to-head, Lam’s strategy was to exhaust the ad budget of competitor websites until such time that their advertising money has run out.

But whatever the reason is, Microsoft still gets to file his lawsuit against Lam and Co.

 Microsoft Files First Lawsuit Against Click Fraud
Arnold Zafra writes daily on the announcements by Google, Ask.com, Yahoo & MSN along with how these announcements effect web publishers. He is currently building three niche blogs covering iPad News, Google Android Phones and E-Book Readers.
 Microsoft Files First Lawsuit Against Click Fraud
 Microsoft Files First Lawsuit Against Click Fraud

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4 thoughts on “Microsoft Files First Lawsuit Against Click-Fraud

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  2. As the Director of paid advertising for a large law firm, I have been interested in click fraud detection since GoTo.com launched the first PPC program. I have programmed several generations of detection technology, and as a firm we have provided data and expertise to many companies with regard to click fraud, and been quoted in major magazines and online outlets on the subject for years.

    ClickForensics is one of the companies to whom we provided data and knowledge, back when they were a startup, and we have never agreed with their analyses. 17% is far too high a figure, in our opinion. During the worst click fraud “epidemics”, we saw no more than 5% or so.

    That being said, it will be interesting to see how the courts approach this. Since there is no relevant law which addresses click fraud executed by un-contracted third parties, Microsoft will have the opportunity to actually write some law, here, if their case is docketed.

    Typically, click fraud is prosecuted (when it is prosecuted) as a contract violation. However if the un-contracted third party does not hold a contract with the advertisement provider (Microsoft), then they are not bound by any legal document, and prosecution then hinges on proving fraud outside the scope of any specific agreement.

    For example, if one were to stand at the entrance of a shop, opening and closing the door, could one be sued for costing the shop owner extra money for heating and cooling expenses? Or for the money to repair the door, should it break?

    If one had signed a document with the store owner agreeing that if one ever cost them money intentionally without intending to actually enter the shop then one would be liable for the extra costs, then the store owner could take one to court for violating the agreement. But without such an agreement? It gets a little bit more tenuous.

    I’m not sure that Microsoft is the best player to be suggesting new law, but it beats nobody doing it. And their position as a major provider may help them get further in the case than a smaller entity would. At the very least, their size and reputation should force the alleged fraudsters into settlement … in which case the law will become irrelevant, and nothing will change.