Los Angeles, CAThere are plenty of ways to make money on the Internet, and some of them can be pretty shady. According to a recent class action filed in U.S. District Court for the Northern District of California by Kabateck Brown Kellner LLP of Los Angeles (KBK), Google, the California information technology giant, is practicing one of those shady ways by knowingly using "parked web sites" to inflate the profits of its AdSense on-line advertising program.
According to Brian Kabateck, founding partner at KBK, "Parked web sites are sites that have no value at all; they're empty of content except for different kinds of advertisements. They are consistently a source of click fraud. Google will put ads that their advertisers purchase as subscribers to AdSense up on these sites. The customer thinks they're giving their ad a placement of some value, but they're really going onto meaningless sites. The only people likely to visit these sites are ones who are paid to click on the ads; they're not there to purchase goods or services from the advertisers.
"The site owners use the site purely to generate revenue for themselves. They get a percentage and Google gets their money when they bill the customer for these useless clicks. The customer doesn't know where the clicks come from; they get a huge bill for their advertising every month but they don't make any money out of it."
Alfredo Torrijos, a KBK associate with expertise in this area, adds, "Our biggest problem with what Google is doing is that they hide where these clicks are coming from. Not only are they not telling their customers where their ads are being placed, but the customer has no idea from reading their monthly bill where their ads are being exported to. It's like buying a pig in a poke when you don't know where your ads are going to appear."
The commonest victims, Torrijos believes, are smaller business owners who don't understand how parked sites cost them money. "They assume that their ads are going to appear on sites where there's an interest in them," he says, "So someone selling furniture, for example, assumes that their ad is being targeted to sites visited by people looking to buy furniture. The reality is that Google allows these ads to be placed on sites where the owner is only into making money. All the customer sees on their monthly bill is how many clicks there have been on their ad and how much they owe Google for those clicks."
The class in KBK's action is any customers who participated in the AdSense program at Google for the four years from July 2004 to July 2008, and whose ads were placed on parked sites. The lead plaintiff is an on-line store called malibuwholesale.com. Malibu Wholesale claims lack of disclosure by Google that their advertising, purchased through AdSense, was appearing on parked sites.
Kabateck says, "They sell exercise equipment, clothing, luggage, and similar things, but their ads have appeared on some very strange, completely unrelated sites. But because of Google's failure to disclose, there was no way for Malibu Wholesale to dispute the fraudulent clicks that appeared on their bill every month."
Kabateck says that in the class action, filed under California consumer fraud laws, "We want first of all, transparency, which means that Google must accurately inform their customers where and how their ads are being placed. Second, we want Google to refund money they've collected for fraudulent clicks generated from parked sites. I can tell you that since Google makes more than a billion dollars a year in ad revenues, the damages could amount to tens of millions a year going back four years from the date of filing. We view this as a very specialized case; this is the click fraud of 2008, which involves Google knowingly allowing it to happen.
"I think that very little goes on at Google without them knowing what's going on. They're certainly not policing their sites and they're certainly not giving their customers the level of service they have the right to expect. It's like a smart virus—Google gets smarter and more intelligent in the way it takes advantage of its consumers."
Brian Kabateck, founding partner in Kabateck Brown Kellner LLP, is a 1985 graduate of the University of California and received his JD from Loyola Law School, Los Angeles, in 1989. Among other honors, he was named California Lawyer of the Year/Litigation in 2006.
Alfredo Torrijos, an associate in the firm, is a graduate of the Stanford University Law School and California State University, Northridge (summa cum laude). He represents consumers in a variety of disputes including fraud, class actions, business torts, elder abuse, insurance bad faith actions and employment actions.