Yahoo to pay advertisers in click fraud suit

Yahoo Inc. agreed to compensate advertisers for click fraud dating back to January 2004 as part of a settlement agreement in a class action lawsuit, the search company said on Wednesday.

Click fraud happens when people click online advertisements with the intent of generating a charge for the advertisers. Online advertisers often pay for their advertisements based on how many times users click on the ad.

Yahoo has offered to allow advertisers to submit click fraud claims for incidents occuring since January 2004. A retired Federal judge will oversee Yahoo’s investigations, which will determine if credit is due to the advertiser. If Yahoo determines there was fraud and that the advertiser hasn’t already been refunded, it will issue a full credit to the advertiser. Yahoo did not reveal how much money it expects to pay back.

Yahoo runs technology it developed called the Clickthrough Protection system aimed at identifying click fraud and removing suspicious clicks so as not to bill advertisers for them.

The deal settles a suit initiated by Checkmate Strategic Group Inc. against Yahoo last year.

Yahoo also agreed to several other initiatives aimed at combating click fraud in the future. It will create a new position of traffic quality advocate, responsible for representing advertisers and their concerns about click fraud within Yahoo.

Yahoo will also host an annual event where it will invite a panel of advertisers to its headquarters to review Yahoo’s Clickthrough Protection system and offer feedback to Yahoo about how it can be improved.

Yahoo also said it will create a traffic quality resource center that will offer more information to advertisers about traffic quality issues and work with a third party to create an industry wide effort to combat click fraud.

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