Facebook Faces Click Fraud Claims

For the third time since July, a pay-per-click advertiser has charged Facebook with billing him for nonexistent clicks.

In a complaint filed last month in federal district court in San Jose, California, resident Steven Price claims that Facebook overcharged him for ads that ran from May 26 to June 21. Price alleges that analytics programs from Google and Statcounter.com demonstrate that roughly two-thirds of the clicks he was charged for never occurred.

Price alleges that Facebook, which charged him $500 for the ads, admitted it had charged him for invalid clicks and credited him $105.01 toward the purchase of additional ads. But Price alleges that the ad credits, which expire at the end of the year, are an insufficient remedy, and is suing for a cash refund. He also alleges that the credits “do not even come close to compensating plaintiff for the monies that he has been wrongfully charged."

Last month, sports site RootZoo and software marketer United ECM also sued Facebook for click fraud.

The wave of lawsuits came within weeks of a widely disseminated post on the blog TechCrunch about alleged click fraud on Facebook that discussed recent marketer complaints made on the WickedFire forum. At the time, Facebook conceded that it had seen an uptick in "suspicious clicks" and was working on a remedy. The company also said it would credit the accounts of affected advertisers.

Calling the lawsuits “unnecessary and baseless,” a Facebook spokesperson said the company has “developed a series of sophisticated systems to detect anomalous activity and ensure advertisers are not charged for this activity.” In the “rare cases” in which charges for invalid clicks are discovered, the spokesperson said, the company issues credits to affected advertisers.

Why it matters: Click fraud has been one of the concerns that has plagued advertisers and the search engines that host ads for some time. These three lawsuits against Facebook feature a new defendant but a familiar problem for online advertisers.