on an advertisement is obviously fraudulent (as defined in the terms and conditions applicable to the specific PPC advertising program), the PPC program sponsor gets paid for the click, whether it resulted from the actions of an interested consumer or not. As long as the problem does not cause the PPC advertising sponsors to lose revenue, they have very little motivation to address the concerns of advertisers.

Though an Internet advertiser may not be able to eliminate the effect of click fraud in PPC advertising, a company can reduce or manage its risk by:

Understanding the Effect of Click Fraud on the Company’s Specific Advertising Plan. Some commentators have argued that click fraud is far less of a problem than generally believed and that it is unfair to expect Internet advertising to guarantee a certain Return on Investment (ROI). They point out, quite correctly, that no other form of advertisement guarantees that it will be viewed by an interested poential customer. However, many businesses and individuals expect their dealings on the Internet to differ significantly from their experience in other media of communication. In any event, a business embarking on a PPC advertising campaign must ensure that it can absorb the cost associated with wasted or fraudulent clicks.

Carefully Reviewing the Terms and Conditions Applicable to the PPC Advertising Program. Most PPC advertising programs have terms and conditions that expressly address the issue of click fraud, detailing how the program sponsor identifies fraudulent clicks and outlining the specific procedure and deadlines which must be met by an advertiser who wishes to challenge the charges associated with certain clicks. An Internet advertiser must carefully review those terms and conditions and compare them to competing programs to fully appreciate the risk associated with a particular PPC advertising program. Careful review of PPC terms and conditions should also ensure compliance with dispute resolution procedures that could save the company thousands of dollars in advertising expenses.

Considering the Use of Third-Party Programs to Quantify and Resolve the Problem. Some third-party vendors advertise software designed to identify fraudulent clicks. The use of that type of software may give the Internet advertiser the information it needs to address the loss associated with click fraud through the PPC advertising program’s dispute resolution procedures or legal action.

Ultimately, click fraud is a problem inherent to PPC advertising. It will never be totally eliminated. However, knowledgeable advertisers can take action to reduce the effect of click fraud on their businesses.

Readers are reminded that all of the information in this article is provided for informational purposes only and is not intended to be a substitute for legal counsel. No one should act or refrain from acting on the basis of any content included on this site but should instead seek the appropriate legal advice on the particular facts and circumstances at issue from a properly licensed attorney.
Jonathan D. Frieden is a principal of Odin, Feldman & Pittleman, P.C., a law firm in the Washington, D.C. metropolitan area. His practice includes the litigation of intellectual property matters and other complex commercial disputes and the counseling of e-commerce businesses in a variety of industries. He is admitted to practice law in the Commonwealth of Virginia and runs the E-Commerce Law blog, a regularly updated discussion of news, trends, and legal issues affecting e-commerce businesses.

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