FACEBOOK SUED FOR CLICK FRAUD

Sports site RootZoo has sued Facebook for click fraud, alleging that the social networking site charged for more clicks than actually occurred. The lawsuit comes several weeks after Facebook users began flooding message boards with complaints about overcharging.

RootZoo, which advertised on Facebook from November of 2007 until June of last year, alleges that its own analytics programs showed significant discrepancies between the data provided by its own analytics programs and the numbers claimed by Facebook.

The complaint provides specifics for one day -- June 2, 2008. On that date, RootZoo's own software programs allegedly showed that 300 clicks had been generated by Facebook, but the company was charged for 804 clicks.

RootZoo said in its complaint that it asked Facebook for its log files and a refund, and that Facebook refused to comply with either request.

Facebook said in a statement that it takes click quality "very seriously" and that the lawsuit "is unnecessary and baseless."

"We have developed a series of sophisticated systems to detect suspicious clicks and ensure advertisers are not charged for this activity. In addition, we analyze tremendous amounts of data to discern larger click patterns and, in rare cases where this research or other analysis reveals advertisers have been charged for invalid clicks, we have always, and will continue to, issue credits to impacted advertisers," the company stated.

TechCrunch reported last month that Facebook advertisers were complaining on the WickedFire affiliate marketing forums about what they perceived as click fraud. Facebook says that those particular complaints stemmed from "an isolated bug with an ISP's toolbar."

The sports site, which filed the lawsuit Tuesday in federal district court in San Jose, Calif., is seeking class-action status. The site's law firm, Kabatek Brown Kellner, has previously sued Google, IAC and other companies for alleged click fraud.

This complaint seems to mark the first click fraud lawsuit against Facebook, but the gist of the dispute -- discrepancies between advertisers' and publishers' numbers -- isn't new.

Eric Goldman, director of the High Tech Law Institute at Santa Clara University, adds that it's hard to assess claims about the accuracy of records without more information. "Advertisers are always going to say, 'I didn't get what I bargained for. That's not unusual," Goldman says. "The question is: Do advertisers just want more for less, or are these complaints evidence of some fairly serious problems?"

COMMENTARY:  Unfortunately the practice of over-charging for click-throughs is pandemic.  Microsoft and Google have both been sued for similar practices.  Now we find out that Facebook is doing the same thing.  When you have a company run by a skateboarding, college dropout like Mark Zuckerberg, CEO, Facebook, he starts believing that he is God's gift to social networking, and revelling in his dominance of MySpace, you get over-confidence, arrogance and start thinking you can increase revenues by padding click-throughs.  Wrong, so wrong.  I hope that anybody who used paid search on Facebook, files a similar lawsuit.

Courtesy of an article dated July 9, 2009 appearing in MediaPost Publications' Online Media Daily