Class Action Settlements: Google Adwords
Google is the well-known search engine begun by Larry Page and Sergey Brin, two Stanford University graduate students, in 1998. It has more than 150 other domains for Internet users to utilize while searching on almost any topic imaginable.
Most of Google’s revenue is generated through its Adwords program, which offers advertisers online ads to promote its products and services. Advertisers bid to have their ads appear alongside a search result for particular key words. Google distinguishes ads by labeling them as sponsored links or as "ads by Google to separate them from ads on search pages from other content pages.
Google has been the subject of a number of class action suits related to its Adwords campaign. In August 2005, an action was brought against it for unfair competition, false advertising and breach of contract. The suit alleged that Google maintained a practice of overcharging its advertisers from a few cents to a few dollars more than their per-day daily budget, thus enriching themselves by millions of dollars per year.
The suit settled in 2009 at a cost of $20 million. The lawyers who brought the action were entitled to $5 million in fees, while the two representative plaintiffs collected $20,000 each.
Another class action was brought in April 2005 against Google by Lanes’ Gifts and Collectibles concerning pay-per-click (PPC) fraud. In PPC, advertisers pay a certain sum each time a user clicks on an ad listed alongside the search page. The suit alleged that Google and Yahoo failed to prevent users with no interest in the ads from clicking on them for the sole purpose of running up the advertising costs. Google's role was seen as a conflict of interest as publisher or operator of their search engine and as collector of revenue from advertisers. Click fraud, however, paid Google much more than what it paid out. This suit was settled for $90 million on March 8, 2006.
In July 2008, Google was sued by an attorney for fraud, business code violations and unjust enrichment over its alleged sale of low-quality ads. The suit also alleged that Google, through its Adwords program, generated income off parked domain pages, or domains that have no content. The suit maintained that Google has millions of parked domains and error pages with little-to-no content that result in few conversions, if any. Google was alleged to have designed its network so that advertisers could not opt out of the parked domains or error networks.
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