Yahoo Click Fraud Settlement Preliminary Approval

By Eric Goldman

Checkmate Strategic Group, Inc. v. Yahoo, Inc., No. 2:05-CV-04588-CAS-FMO (C.D. Cal. preliminary settlement approved June 28, 2006)

I’m a little late blogging this, but Yahoo has gotten preliminary approval to settle its click fraud lawsuits. The basic deal is that Yahoo pays the lawyers $4.95M and gives 100% credits to advertisers for any click fraud they can find back through Jan. 2004. According to Yahoo’s press release, the other settlement terms include:

* hiring a Dedicated Traffic Quality Advocate “dedicated entirely to addressing advertiser concerns about click fraud and traffic quality issues.”

* an annual meeting at Yahoo’s facilities with some advertisers to discuss click fraud

* an effort to coordinate an industry-wide response to click fraud

* some additional web disclosures and tools to help advertisers monitor traffic quality

This seems like a very good deal for Yahoo–even compared to Google’s sweet deal to settle its lawsuits. Yahoo is paying 1/6 the out-of-pocket legal fees that Google will pay, and I’m pretty sure Yahoo hasn’t made only 1/6 of Google’s revenue. Admittedly, Yahoo hasn’t capped its credit liability (which Google capped at $60M), but I don’t think it’s a big “give” to credit advertisers for actual click fraud whenever it’s discovered (even years later). Yahoo should credit away click fraud as a matter of good advertiser relations and corporate ethics regardless of the settlement.

In any case, it remains to be seen what happens to the Google and Yahoo click fraud settlements given the rising advertiser furor over the settlements. The Google settlement hearings are continuing today, so we may know more very soon.

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