Pay-Per-Click Fraud Exposed

By Dean Phillips
Posted Monday, October 4, 2004

Has anyone else noticed a disturbing pattern in your pay-per-click advertising campaign, of the same IP addresses clicking on your ad, spending one or two seconds on your website and then leaving?

That's called click fraud and it's a major problem among all of the pay-per-click search engines.

Click fraud is a scheme that takes advantage of online advertising programs like those offered by Google, Yahoo/Overture, Findwhat and others. A fraudulent website is set up and participates in programs like Google's AdSense program. Unlike legitimate websites that attract human visitors to the site, fraudsters use software "hitbots" or employ boiler-rooms of low-wage employees from other countries to generate clicks on ads, and then collect commission from pay-per-click programs.

In June, a federal grand jury returned an indictment against Michael Anthony Bradley 32, of Oak Park California who was charged with fraud and extortion for a scheme involving Google's pay-per-click program. Believe it or not, Bradley actually tried to extort Google into paying $100,000 for click fraud software he created called "Google Clique."

Click fraud hurts advertisers by driving up the cost of each click because many online advertising programs adjust the price of each click based on the popularity of a particular keyword and the number of competing advertisers. And depending on how popular your keyword is, it can take just a few minutes to register hundreds of clicks. Click fraud can quickly deplete your pay-per-click account and leave you with little or nothing to show for your expentiture.

In a recent filing to the Securities and Exchange Commission, Google acknowledged, "We are exposed to the risk of fraudulent clicks on our ads. We have regularly paid refunds related to fraudulent clicks and expect to do so in the future. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks, we may have to issue refunds retroactively of amounts previously paid to our Google Network members."

Now, in all fairness to the pay-per-click companies I've used in the past, I have to give credit where credit is due. Whenever I complained of click fraud, which was often, all of the pay-per-click companies, without exception, did the right thing and credited the stolen funds back into to my account. Ironically, I have not had a click fraud problem with Google.

You can reduce your risk of being victimized by click fraud, by regularly auditing your website’s log files and immediately reporting suspicious traffic to the pay-per-click companies. If you are unfamiliar with analyzing your site’s log files, there are some excellent software products available to assist you like ClickTracks, WebTrends, and AWStats. These products make it fairly easy to identify patterns in your website's traffic.

Recently, I noticed the same IP number clicking on my ad over and over again--often many times within just a few minutes. I did some basic detective work and discovered it was actually a competitor of mine devouring my pay-per-click dollars. I approached him with my findings and threatened him with law enforcement intervention, if he didn't cease and desist. He denied any involvement, of course. But I haven't had any problems with that individual since.

So, how did I find out who the culprit was? Easy.

When checking your log files, if you notice a lot of clicks from one IP address, you can trace its origin by visiting the American Registry of Internet Numbers. By feeding the IP address into their "Whois" search, they will tell you who has been assigned that IP address, and whether it's an actual IP or another business entity.

Should the IP address not be assigned to the Americas, you can verify RIPE Network Coordination Center for all Russian, European, and Middle Eastern registries, or the Asia Pacific Network Information Center. There are only three such sites, so you should be able to track the source.

However, if someone is using sophisticated software to generate clicks on your ad, it will probably be impossible for you to trace the IP address yourself. For example, according to alleged Google extortionist, Michael Bradley, "Holland Engine software was originaly written to allow spammers to conceal their orginating IP address from mailservers and to keep it from apearing in e-mail headers.

Holland Engine is the core of LincolnSX, the most powerful mass-emailing software, running at rates of 5 million e- mails per day per machine. Holland Engine will actually tunnel through the internet and connect to the desired IP address from, not your IP but rather from another, the one at the end of the tunnel."

In conclusion, if you choose to use pay-per-click search engines to advertise, watch your log files closely and report improprieties immediately.

Also don't put all of your eggs into one basket, by depending solely on pay-per-click advertising. Utilize a variety of ways to attract traffic to your website, such as ezines, newsletters, writing articles, offline advertising, etc.

About The Author
Dean Phillips is an Internet marketing expert, writer, publisher and entrepreneur. Questions? Comments? Dean can be reached at mailto: dean@lets-make-money.net