August 09, 2005
Google Sued (Again!) for Overcharging Advertisers
CLRB Hanson Industries LLC v. Google, Inc., Case No. 1-05-CV-046409 (Cal. Superior Ct. complaint filed August 3, 2005).
Advertisers, including radio personality Howard Stern, have filed a new class-action lawsuit against Google for overcharging in AdWords. This represents the third such lawsuit brought against Google, following on the lawsuits led by Lane's Gifts and Collectibles and Click Defense. While those two related to "click fraud" (where Google allegedly charged advertisers for insincere clicks), in this case the plaintiffs are alleging that Google did not honor daily spending limits set by the advertisers.
Specifically, the complaint alleges that Google ignores daily limits and, instead, creates a monthly limit based on the aggregate of the month's daily limits. If true, this would be problematic for Google because it promised that advertisers could set daily limits, and a monthly limit would not be the same thing. Google could simply give advertisers only the option of setting a monthly limit (instead of daily limits) if that's how Google codes its software.
Unfortunately, we don't have too much information about this lawsuit, so we'll be watching for more details.
I don't know how this one will turn out, but two points seem relevant:
- Google has always advised advertisers that the daily budgeting feature gives advertisers recourse only if the limit they exceed is the daily budget times 30, over the course of a month.
- More recently Google seems to have released a feature allowing advertisers to set a monthly limit. Perhaps this is in response to complaints and threats of lawsuits over the past couple of years.
They may prove to be liable in this case, but going forward it looks like they'll make the necessary adjustments to avoid future problems.
The budgeting features are difficult for some advertisers to grasp, like many features "hacked out" by Yahoo and Google in this very new industry.
Posted by: Andrew Goodman at August 9, 2005 05:03 PM