Google Inc. said on Wednesday that it agreed to pay up to $90 million to settle allegations in an industrywide lawsuit that claims search-engine companies overcharge advertisers by billing them for false customer clicks on search-engine ads.

Several plaintiffs, including Lane’s Gifts and Collectibles, filed a suit last year in an Arkansas court alleging Google and other search advertising providers indirectly benefit from click fraud by doing too little to thwart it, according to media reports.

Many advertisers — real estate companies and agents among them – use Google’s ad service that enables them to bid for placement in the search engine’s “sponsored links” section. Advertisers must pay for each customer clickthrough, or lead, obtained from these ads.

There have been reports of “click fraud,” on Google and other search advertising services, where someone repeatedly clicks on an advertising link either manually or using a robot to drive up advertiser fees.

Also named in the original lawsuit were Yahoo Inc., Lycos, LookSmart, and FindWhat.com (now known as MIVA), among others, media reports said. A Yahoo spokeswoman told Reuters that the company was prepared to continue defending itself against the legal action.

Google’s proposed settlement deal covers all advertisers who claim to have been charged but not reimbursed for invalid clicks dating from February 2002 through the date the settlement is approved by the judge, according to a statement from Google’s Associate General Counsel Nicole Wong on the company’s blog.

“Google currently allows advertisers to apply for reimbursement for clicks they believe are invalid. They can do this for clicks that happen during the 60 days prior to notifying Google. Under the agreement with the plaintiffs, we are going to open up that window for all advertisers, regardless of when the questionable clicks occurred,” Wong said.

The company will offer credits, which can be used to purchase new advertising with Google, for all eligible invalid clicks, she said.

“We have said for some time that we believe we manage the problem of invalid clicks very well. We have a large team of expert engineers and analysts devoted to it,” Wong said, with the majority of invalid clicks caught by Google’s automatic filters and discarded before they reach an advertiser’s bill.

More information on how Google handles invalid clicks is available at https://adwords.google.com/support/bin/topic.py?topic=35, and http://adwords.blogspot.com/2006/03/about-invalid-clicks.html, Wong added.

The proposed settlement deal awaits certification from the judge, with the final settlement hearing expected to take place in coming weeks, according to a Reuters report.

***

Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.

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