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Microsoft is seeking $750,000 in damages for alleged click fraud

Microsoft has announced that it has filed a lawsuit against three individuals for alleged click fraud. The trio accused of click fraud are Eric Lam, Gordon Lam, and Melanie Suen all of Vancouver, British Columbia. The Lams are believed to be brothers according to Microsoft and Suen is believed to be their mother.

The allegations brought against the accused by Microsoft are that the trio perpetrated click fraud attacks against online advertisements relating to auto insurance and World of Warcraft. Microsoft general counsel Tim Cranton wrote in a blog post, "Earlier today, after a thorough investigation, Microsoft filed a civil lawsuit in the U.S. District Court for Western Washington outlining a massive click fraud scheme believed to have impacted Microsoft’s advertising platform and potentially other networks. The case is Microsoft v. Lam, et. al., case number 09-cv-0815."

According to Cranton, click fraud is when a person, script, or program imitates a user and clicks on an ad without having real interest in the ad thereby generating a fraudulent charge per click. Typically, Cranton and his team work to combat what they call classic cybercrime issues like child protection, security, malicious code, and online fraud.

The team is expanding its purview to cover other crimes that are less traditional but are increasingly important to cybercrime enforcement. Click fraud is an area that Cranton and his team say poses a threat to the online advertising industry as a whole.

Microsoft has reportedly had to pay about $1.5 million in refunds to advertisers over click fraud. It's not clear if that amount is specifically from the case against the trio in this instance.

Microsoft will be releasing a free version of an anti-virus app to help keep Windows users safe online soon.



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Why did they do it?
By corduroygt on 6/16/09, Rating: 0
RE: Why did they do it?
By rvd2008 on 6/16/2009 12:07:49 PM , Rating: 5
didn't they do it for money?


RE: Why did they do it?
By Motoman on 6/16/2009 12:15:53 PM , Rating: 5
The question would be "how." It's not clear how they would make money on this, unless they were associated with the advertising agency or something.

There are "click centers" in China that do have contracts to do these things...the ad agencies (or somebody) literally pays them to click on ads to generate click-through fees.

But unless you have that kind of arrangement to actually make money on the clicking, one wonders why they bothered...


RE: Why did they do it?
By monomer on 6/16/2009 12:26:22 PM , Rating: 2
Didn't MS Live have a beta program last year where they would pay you (either cash or a points based reward system) for using their search engine, and clicking on advertisements?


RE: Why did they do it?
By bubba551 on 6/16/2009 1:46:50 PM , Rating: 2
LOL!

That was a chain letter.

By the way, I have a bridge for sale - cheap.


RE: Why did they do it?
By monomer on 6/16/2009 2:24:19 PM , Rating: 2
Actually, I was thinking of the Live (Bing) Cashback program that MS started last year. It turns out the cahhback only applies if you wind up buying something, so it doesn't really apply here.

http://news.cnet.com/8301-13860_3-9949645-56.html


RE: Why did they do it?
By rtrski on 6/16/2009 2:32:37 PM , Rating: 2
Actually the cashback is alive and well. They don't pay you for clicking on 'ads' specifically, but if you search something out thru live.com (now bing.com) and then buy it after clicking on a "Cashback" sponsored link to the merchant, they did indeed pay you. Restrictions apply - same browser session, within an hour or so...but nothing prevents you from searching out what you want and where from elsewhere, THEN jumping thru the brief hoops to get the cashback.

I bought a retail $1600 lens used for $1200 thru ebay from an individual seller (not a "storefront")...and got $200 paid directly to my paypal account from Microsoft (no doubt sponsored by ebay as advertisement) as well. This was in December of last year - ebay's cashback rates have varied from nothing to 25% at various times (in this case it was 25%, but $200 is the max per item rebate).

As I already had a paypal and msn ID, it took me all of 3 minutes extra to set up and confirm the cashback account to let it happen. What's not to like? (Well, it did take them about 30 days to credit the funds, but that was also in the terms ahead of time, so I knew going in.)

I have noticed that using Firefox, AdBlockPlus blocks those sponsored link results from showing up in Bing searches, so I have had to disable ABP on bing, but that's easy enough to just toggle off when checking to see if I can get a little return scratch before major purchases vs. having to disable it all the time.


RE: Why did they do it?
By callmeroy on 6/16/2009 1:21:19 PM , Rating: 5
I asked the same thing initially -- why did they do this. Now that I read the court document on the case filed by Microsoft --- it explains everything (obviously as it should). In fast summation one of the issues is the defendants operate a WoW gold selling website (wowmine.com) -- through manipulating of microsoft's advertising network and advertising software, Microsoft claims they artifically exhausted the click through ad budget of competing websites there by lower their competitions visibility on Live Search while raising their web sites visibility for cheaper rates. In other words other wow gold selling sites paid for premium advertising ranks through microsoft's ad services. This team of fraudster comes along and schemes using bots and or any other non-legit means to exhaust the pay-per-click budget model used by the wow gold sites to pay for advertising -- this cause those companies money for essentially no return (or less return than expected when they paid for the advertising). That's bad thing #1 the defendants did. Bad thing #2 they did, this action lowered the cost of the same keywords because of the perceived devaluing by the system and then they bought premium advertising for their own website business for much cheaper.

the net result , MS claims is the defendants obtained at least $250,000 in revenues all made by these deceptive practices.


RE: Why did they do it?
By Belard on 6/16/2009 3:38:42 PM , Rating: 5
Shouldn't that information be in the article?


RE: Why did they do it?
By icanhascpu on 6/16/2009 7:43:55 PM , Rating: 5
Sorry there was only enough room at the end to tell everyone about the new MS antivirus software.

Even though it had nothing to do with anything here.


RE: Why did they do it?
By tallcool1 on 6/17/2009 7:35:12 AM , Rating: 5
I was thinking the same thing. What the hell was that MS Antivirus "ad" doing in this article. It was completely out of place.

I think "callmeroy"'s post should replace Shane's article as the actual article! It contained more detailed information and looks like someone that actually took time to "Write" something usefull.


RE: Why did they do it?
By MrPoletski on 6/18/2009 8:38:31 AM , Rating: 2
hey do you want DT to be able to afford it's hosting costs or not? ;)


RE: Why did they do it?
By Regs on 6/18/2009 6:54:16 PM , Rating: 2
If you do a search on Google on most of these DT articles, especially in the blog section, the articles are almost plagiarized minus a few words from another site. It's like a 16-year-olds high school book report.

Don't lie...you did it too and you passed.

I really hate to critize DT like they're the only ones that do it so don't take me wrong. Most of web sites do not have the resources to actually do the grunt work research. I didn't join DT thinking that they had reporters like the channel 4 news that go out and interview 40 people at a time to post an article.

But at least they can interpret what information is useful!!! WTF


RE: Why did they do it?
By tfk11 on 6/19/2009 3:22:15 AM , Rating: 1
bump


RE: Why did they do it?
By dragonbif on 6/16/2009 12:35:52 PM , Rating: 2
They probably hosted the ads and Microsoft was the ad firm or agent like Google or Yahoo. When an ad is clicked on the host site gets a little of what Microsoft gets from the company that pays for it. But they could also have been trying to drive costs up for someone.


RE: Why did they do it?
By TomZ on 6/16/2009 12:58:41 PM , Rating: 2
That's not what Microsoft is charging. Read some of the other comments below.


RE: Why did they do it?
By dragonbif on 6/16/2009 8:01:55 PM , Rating: 4
o i c...its a key word thing...why is that not in the article or did I miss that part?


RE: Why did they do it?
By napalmjack on 6/16/2009 2:19:55 PM , Rating: 2
They just got greedy...

This trio reminds me of another "Mom & Her 2 Sons" group: The Goonies baddies anyone? Perhaps a pic would be in order, Shane.


RE: Why did they do it?
By LegalGenius on 6/16/2009 3:50:54 PM , Rating: 5
Background : The three defendants were born in China, now living in BC Canada. They set up two corporations based in Delaware, both joined a partnership with microsoft's advertising company. These companies were selling World of Warcraft gold through the internet.

Mechanics: When you type something into a microsoft search engine, like "Wow Gold" you will get an organic search list, plus sponsored links at the top of the site. Companies bid on hot keywords like "wow Gold" or "cheap airfare" etc. If company ABC bids $5 for a keyword and company XYZ bids $6, the ad for XYZ will pop up when you type your search. If a searcher then clicks on that sponsored link, company XYZ owes microsoft $6. Quite often a company like XYZ will set a budget of $XXX.XX amount for this add campaign; and their ad will be featured until the budget has been depleted. Once the budget has been depleted, the ads for company ABC will now start to appear; and company ABC will pay only $5 per ad (their original bid price).

Click fraud occurs when bots, macros, or other illegitimate means are used to mimic the traffic of an actual person on the internet. By clicking on competitor's links thousands of times per day, the perpetrator can exhaust the budget of a rival firm. If this can be done enough, the perp's website will move up in rank after higher payer's budgets have been exhausted and ads will be featured at the cheaper bid price.

Sounds like a win win for Microsoft because they get a bunch of money, but if done enough it will undermine the confidence of its advertisers.


RE: Why did they do it?
By Flunk on 6/16/2009 4:15:05 PM , Rating: 3
This is going to be an interesting case, they're going to have to prove that "Click Fraud" is illegal first and secondly that these were the people involved in the fraud.


RE: Why did they do it?
By TomZ on 6/16/2009 4:27:37 PM , Rating: 3
In a way, details like that don't matter. What matters is that these clowns now have a very costly lawsuit they have to defend themselves from. Either that or flee. So Microsoft probably will succeed in shutting down this particular group plus putting others doing the same on notice. Mission accomplished, right?


RE: Why did they do it?
By MamiyaOtaru on 6/16/2009 7:06:20 PM , Rating: 2
/aircraft carrier


RE: Why did they do it?
By dragonbif on 6/16/2009 8:05:41 PM , Rating: 2
hehehe "prove" thats a funny thing to say in a lawsute case. They are not looking to put them in jail.


RE: Why did they do it?
By Visual on 6/17/2009 4:22:02 AM , Rating: 2
Thanks for the details, it is very interesting to know.

It is quite clear that such "click fraud" is not illegal in general, but I expect that in this particular case the companies sign up some contract that they would not do it.
It is curious how well the contract defined what is not allowed, as well as what the consequences of breaching it are... because if it didn't define those aspects well, I don't think a trial has any point at all.


RE: Why did they do it?
By MrPoletski on 6/18/2009 8:41:16 AM , Rating: 2
NOTE TO ALL:

People who pay real money for WOW gold pieces, eve ISK or whatever your chosen MMPORGs currency is...

...those people are SAD, real SAD.


Interesting
By HotFoot on 6/16/2009 12:01:17 PM , Rating: 5
This should be an interesting case to watch. While I have no doubt that the click-fraud is malicious, it brings to question what rights I have to do whatever I please on my computer in my own home. If an advertising company wants to be putting banners in my face, then I would think what I do with those banners, be it ignore them or click them, is up to me....

The only time I would see this being a problem is if the adds were hosted on my own website and I were profiting from these clicks. In that case I would be breaching the contract I had with the advertising company.




RE: Interesting
By Motoman on 6/16/2009 12:19:58 PM , Rating: 2
It is quite interesting. On the one hand, as you point out, well, there's an ad here on my screen and I can click on it if I want.

On the other hand, Microsoft could argue that it was a "malicious" clicking, even if it there wasn't a profit motive on the part of these 3, in as much as their "malicious" clicking caused an undue financial burden on Microsoft.

That's going to be a real tough one though. If they had some kind of an association with an ad agency or somebody whereby they were making money by malicious clicking, then I think Microsoft has a case. If on the other hand they weren't actually making any money here, and were doing it just to be pestish to Microsoft...well, I think that is likely a case of "if you don't want me to click on it, don't put it on my screen."

Microsoft could probably pretty easily take care of such an issue if they wanted to anyway - like only accepting the first click from an IP address within, say, 15 minute intervals or something - at which point malicious clicking becomes essentially impossible to do.


RE: Interesting
By Motoman on 6/16/2009 3:04:41 PM , Rating: 1
...after learning more of the specifics of this case, it's pretty cut-and-dried that this is fraud.

These guys worked for the ad agency, and were fraudulently using up the ad budgets of the targeted companies so that their lower-level clients could take over the primary ad spots.

That, dear friends, is fraud.


RE: Interesting
By TomZ on 6/16/2009 3:14:08 PM , Rating: 2
quote:
These guys worked for the ad agency, and were fraudulently using up the ad budgets of the targeted companies so that their lower-level clients could take over the primary ad spots.
That's not what the Microsoft suit states. See the link elsewhere in the comments.


RE: Interesting
By Motoman on 6/16/2009 3:23:58 PM , Rating: 2
http://www.nytimes.com/2009/06/16/business/media/1...

Well, I got that from the New York Times...

quote:
Microsoft’s theory is that Mr. Lam was running or working for low-ranking sites that took potential client information for auto insurers. The complaint said that he directed traffic to competitors’ Web sites so they would pay for those clicks and exhaust their advertising budgets quickly, which let the lower-ranking sites that he sponsored move up in the paid-search results.


RE: Interesting
By fishbits on 6/16/2009 12:53:22 PM , Rating: 4
"... it brings to question what rights I have to do whatever I please on my computer in my own home"
My understanding of the Internet is that it does not reside, entirely, "in your own home."

To clarify, I can't call a person or business' published phone number incessantly and claim the defense of "doing whatever I please on my phone in my own home."

"If an advertising company wants to be putting banners in my face, then I would think what I do with those banners, be it ignore them or click them, is up to me"
Nor do I think this was a case of surfers minder their own business, seeing a banner ad and clicking on it. That said, the author of the article could have bothered to devote a paragraph to clarifying the complaint.


RE: Interesting
By TomZ on 6/16/2009 1:00:52 PM , Rating: 2
quote:
it brings to question what rights I have to do whatever I please on my computer in my own home
First of all, this is a civil lawsuit, not a criminal complaint, so we have to be careful in that respect.

But in general, your home doesn't provide any kind of protection or defense against breach of contract, fraud, or most any crime for that matter.


RE: Interesting
By HotFoot on 6/16/2009 1:16:34 PM , Rating: 2
*nods*

Really, I'm more curious than anything on this one. I can see the other poster's point about not being able to do whatever you want with your own phone and a phonebook, and I can see where in the end the intent of the person is in question and you shouldn't be able to 'hide' behind anything there when you are purposely doing something wrong to someone.

Still, I'm thinking it's a slippery slope to tell me I can't click on something. For argument's sake, I didn't initiate the interaction - the ad hosting folks did.

There has to be some kind of grey-area balance and that's where I'd like to see where this goes.


RE: Interesting
By TomZ on 6/16/2009 1:22:55 PM , Rating: 2
In my opinion, the distinction is made with common sense. If you decide to spend a little time for fun clicking on ads that don't really interest you, then I don't think anybody is going to come after you.

If, on the other hand, you own some companies, they have web sites, you use click-advertising, and then you hire a bunch of people and/or write software that initiates thousands of clicks per hour on your competitors' ads, then I think you should be watching the front door for legal papers to be served on you.


RE: Interesting
By Motoman on 6/16/2009 11:32:56 PM , Rating: 2
...how hard would it be, though, for Microsoft (or whoever) to register IPs they've gotten a click from, and not register any further clicks from them within, say, 15 minutes or so? Seems like that would take care of the problem...even if persistent little buggers kept clicking away like mad, they'd do close to no harm.


RE: Interesting
By Visual on 6/17/2009 4:36:59 AM , Rating: 2
Even for companies that decide to do those things, it should be OK by default. Microsoft came up with a stupid ad-serving system, one that is easy to trick and there is nothing illegal in abusing it.

Unless, of course, you've signed a contract in which you specifically declare that you will not do it. And my guess is, in these particular cases there is such a contract.

So my point is that independent third-parties such as a competitor corporation to MS, or a random MS-hater at home, should be free to wreck havoc to their retarded system until MS fix it, but clients of MS should not.


RE: Interesting
By Targon on 6/17/2009 7:11:48 AM , Rating: 2
There are differences between violating a contract and intentionally harming others via a weakness in the system. In this case, there is/was the benefit to the defendants by having their web sites(or client web sites) moving up in the rankings. Then there is the harm to others, generating an insane number of false positive clicks via a bot/script, which DOES cause problems.

The bad thing about this is that it reinforces the perception that many from China will be scammers and con artists. How many cases of computer and Internet crime are there that come from China, East Asia, and Russia(not to mention Nigeria)? Now we have some from China that have moved to Canada that are following the path we see from those IN China. I am not saying that all Chinese are like this, but there seems to be a growing negative perception of the Chinese people, not just the government over there sanctioning a lot of hacking and similar behaviors.


RE: Interesting
By smackababy on 6/18/2009 9:32:12 AM , Rating: 2
I am sure when your country has a billion more than everyone else, you're likely to have more bad eggs.


Is it just me?
By Cappadocious on 6/16/2009 1:18:58 PM , Rating: 5
quote:
Microsoft will be releasing a free version of an anti-virus app to help keep Windows users safe online soon.


Or does this just not have anything to do with the story ?




RE: Is it just me?
By callmeroy on 6/16/2009 1:26:10 PM , Rating: 5
Its not just you -- I found that sentence rather odd as well given the story. It would be like this:

"The new Iphone 3Gs goes on sale, officially on June 19.
Meanwhile, Arby's announced a new swiss melt roast beef sandwich to debut later in the summer...."

:)


RE: Is it just me?
By Motoman on 6/16/2009 6:55:57 PM , Rating: 3
That's not a non-sequitor at all. The paragraph would continue: "User Acceptance Testing has shown the sandwich to be superior in all aspects to the iPhone. While the new iPhone has groundbreaking, unheard-of features such as 'cut and paste,' the sandwich never once turned itself off or lost an internet connection, and compared to the Apple product, was found to be 'quite tasty and filling.'"


RE: Is it just me?
By TomZ on 6/16/2009 1:40:29 PM , Rating: 2
quote:
Or does this just not have anything to do with the story ?
I agree. Makes me wonder whether the author took the time to understand the underlying complaint Microsoft is making. It has nothing to do with viruses.


RE: Is it just me?
By Belard on 6/16/2009 3:42:07 PM , Rating: 2
I was about to post the same thing...

What a crock.

You know that USB 3.0 is going to be 10x faster than USB 2.0. Allowing people to transfer their porn faster than ever.


RE: Is it just me?
By Mclendo06 on 6/16/2009 8:53:00 PM , Rating: 2
I thought this rather out of place also. It has to do with Microsoft, but that's about it. Sounds like someone doesn't have enough for a second story.


Why they would do this
By genebadd on 6/16/2009 12:22:56 PM , Rating: 2
These guys were most likely pay per click advertisers themselves and most likely promoting world of warcraft and insurance products.

They were most likely clicking on their competitions ads to cost them money thereby driving them out of the pay per click business...

http://www.bestsocialnetworkingsoftware.com




RE: Why they would do this
By TomZ on 6/16/2009 12:30:52 PM , Rating: 2
That's exactly what Microsoft is claiming in the suit. It is an interesting read:

http://microsoftontheissues.com/cs/files/folders/9...


Click Fraud Affects all of us
By MarcoP123 on 6/16/2009 5:53:28 PM , Rating: 2
<p>Many people are hurt by click fraud. The people placing the ad obiously got defrauded. So did Microsoft because they get their percentage. All marketers then must be suspicious of click metrics. And the list goes on.</p>
<p>This will become a major problem for interactive marketers. It's great that the major players are taking action. More: http://domusinc.blogspot.com/2009/06/click-fraud-a...




Click Fraud Affects all of us
By MarcoP123 on 6/16/2009 5:55:16 PM , Rating: 2
Many people are hurt by click fraud. The people placing the ad obiously got defrauded. So did Microsoft because they get their percentage. All marketers then must be suspicious of click metrics. And the list goes on. This will become a major problem for interactive marketers. It's great that Microsoft is taking action. More: http://domusinc.blogspot.com/2009/06/click-fraud-a...




Shane...
By icanhascpu on 6/16/2009 7:41:22 PM , Rating: 2
Instead of giving an irrelevant little boost for MS new upcoming free antivirus, how about you explain more about what this article is about instead of letting the commentary do the real article for us?




"I'm an Internet expert too. It's all right to wire the industrial zone only, but there are many problems if other regions of the North are wired." -- North Korean Supreme Commander Kim Jong-il

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