Careful Sleuthing Weeds out Internet Fraud

Redmond, WAA growing form of Internet fraud is evolving from the proliferation of e-commerce and online business activity involving pay-per-click (PPC) advertising. This latest Internet scam is known as "click laundering" and is costing legitimate business big dollars.

"Online ad fraud is evolving in sophistication all the time," said Brad Smith, senior vice president and general counsel for Microsoft, in comments published on 5/20/10 by Daily the Pak Banker. "Fighting it demands vigilance and dedication to an honest and secure online marketplace. We believe that a trusted marketplace is critical to Internet commerce, and Microsoft will continue to take aggressive action working with industry and law enforcement to protect our platforms, customers and advertisers."

Two lawsuits were filed earlier this month in the US District Court for the Western District of Washington alleging click laundering, a recently discovered form of internet fraud that was uncovered after Microsoft investigators noted dramatic and irregular growth in click traffic on two sites within the Microsoft adCenter network.

Click fraud occurs when clicks are submitted to an ad where there is essentially a lack of actual interest in the target(s) of the ad's link. The clicks are initiated simply to drive up charge-per-click traffic. This can happen in a myriad of ways, usually through the use of a computer program or an automated script. However, individuals have also been known to engage in PPC fraud by pretending to be a legitimate website visitor with a genuine interest in the product, link or target of the ad.

And it gets even more complicated: purveyors of internet fraud will use various means at their disposal, including malware programs, to trick Internet users into visiting websites that have them unknowingly clicking on ads. The Microsoft adCenter monitors click traffic to ensure advertisers are not being charged for non-valid clicks. However, as Daily the Pak Banker reports, purveyors of PPC fraud have found ways to disguise the origins of invalid clicks in an effort to fool the ad platforms.

Microsoft has been actively investigating such examples of Internet fraud and Internet scams.

One of the two most recent lawsuits names Web publisher RedOrbit Inc. and its president as defendants. The other is a John Doe suit alleging that unidentified defendants engaged in unlawful PPC activity. Earlier this month the software giant resolved a lawsuit it brought last year involving auto insurance verticals. Terms of the settlement were not disclosed.