Lead Fraud (A Cousin of Click Fraud)–NetQuote v. Byrd

By Eric Goldman

NetQuote, Inc. v. Byrd, 2007 WL 1725587 (D. Colo. June 13, 2007)

I know advertisers are fed up with click fraud, but let’s be clear–every ad payment method will be gamed. This case nicely illustrates that challenge. NetQuote is an insurance lead-generation system. Users submit quote requests to NetQuote, which in turn sells the leads to its insurance customers. A competitor, MostChoice, had an employee (Byrd) submit hundreds of bogus quote requests through NetQuote’s system (should we call this “lead fraud” or “request fraud”?). As result, NetQuote’s insurance customers paid for these bogus leads, which reduced NetQuote’s conversion rate for its customers and wasted its customers’ time following up on the bum leads. Meanwhile, MostChoice pitched its insurance customers saying that (surprise!) it provided higher quality leads than its competitors.

NetQuote sued Byrd and MostChoice for a number of claims. This ruling dealt with MostChoice’s attempt to dismiss the fraud claim. MostChoice argued that, at worst, bogus information was fed to NetQuote’s computers, not to a human at NetQuote, and it’s not possible for a computer to rely on false information. This argument is rich with ontological potential, but as a legal argument, it stinks. The court gently declines this argument and says that NetQuote may proceed with its fraud claim.

HT: Rebecca