Google accused of fraud with AdWords program

Last week, Google was sued for fraud based upon a claim of selling low-quality advertising through its AdWords program. Attorney Hal K. Levitte says he paid for AdWords advertising in 2007 that was bogus. Part of the money they paid was for 202,528 impressions from pages that were parked domains.

Parked domains are essentially websites that haven't been established yet, but have a generic page as a placeholder. Google AdWords appear on many of these parked pages, and advertisers are charged when people visit these pages or click on the linked ads.

The problem is that when I see a parked page, I immediately leave it. Yet the advertisers who are paying per view of the page are being charged because I went to the page. They have almost no chance of me even considering their ad because I leave so quickly, yet they pay for my page view nonetheless.

I suspect I'm not alone in my actions, and so does the plaintiff in this lawsuit. But Google says that its AdSense for Domains product provides values for web surfers who end up on parked domain pages. The company says the advertisements help surfers find what they're looking for. However, Google recently made changes to its programs to help advertisers avoid advertising on these bad pages. Opponents say it's still difficult to opt out of advertising on parked domains.

Levitte also says he paid for impressions that occurred on error pages through the AdSense for Errors program. He says he paid for 1,009 impressions, 25 clicks, and zero conversions. The complaint says that Levitte paid $136.11 for advertising on parked domains and error pages, which was over 15% of his advertising cost with Google. Levitte is seeking class action status so that other advertisers can join the suit against Google.

This one will be interesting. Google certainly has the upper hand when it comes to advertising on the internet. Yet the program is imperfect, and I'm not surprised that consumers are finally asserting their rights against some of the less-than-optimal details of its programs.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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