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The Honolulu Advertiser
Posted on: Friday, July 28, 2006

Google settles 'click' fraud suit for $90 million

Associated Press

TEXARKANA, Ark. — An Arkansas judge yesterday approved a $90 million settlement between Google Inc. and advertisers who claimed the Internet search engine company improperly billed them for "clicks" that didn't lead to genuine customers seeking their products.

Miller County Circuit Judge Joe Griffin called the settlement "fair, reasonable and adequate" and downplayed claims it hurt small advertisers. More than 70 objections were filed, with smaller companies saying they didn't have the resources to prove "click fraud" losses.

By settling claims made in the plaintiffs' class-action lawsuit, Google will give advertising credits that are the equivalent of a $3.80 refund on every $1,000 spent in its advertising network during the past 4 1/2 years.

No one will receive cash except the lawyers, who will split $30 million.

Some of the plaintiffs went before Griffin on Monday to argue that Google hadn't taken reasonable care to prevent click fraud and overstated the steps it has taken against would-be swindlers. Click fraud drives up advertisers' costs by falsely indicating the number of Web users who have "clicked" on an Internet ad.

A Texarkana company — Lane's Gifts and Collectibles — filed the lawsuit, which Griffin certified as a class action. Google did not admit liability in the case, which also involves other Internet companies whose cases continue.

Google lawyer Daralyn Durie had told Griffin this week that 19 of the company's 20 largest advertisers had agreed to the settlement and urged its approval.

Brian Kabateck, a California-based lawyer who has sued Google for click fraud in a similar class-action lawsuit in San Francisco and objected to the Texarkana settlement, said he was disappointed with a decision awarding plaintiffs what he calculated to be a half-cent on the dollar.

Kabateck, who had some clients in the Texarkana case, said he plans to appeal Griffin's decision.

In his ruling, Griffin said he based his decision on the strength of Lane's case, Google's ability to pay, the potential expense of further litigation and the limited amount of opposition.

Since 2001, the ads have generated $15.7 billion in revenue for Google and its partners, turning the Mountain View, Calif.-based company into one of the world's most prized businesses.