Yahoo implicated in SpyWare click fraud

[dnc_ont]

Tuesday Apr 04, 2006


Advertisers who expect their Overture ad campaigns to run with certain Yahoo Searches may be surprised to find their ads running in syndicated spyware applications that render each impression as an ad click the advertiser must pay.

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Editor's Note: Ben Edelman has again made some damning claims about Yahoo and its relationship with spyware vendors. Have your Overture campaigns seen behavior that looks like click fraud? Tell us more at WebProWorld.
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When that click is paid, according to spyware researcher Ben Edelman, Yahoo and the spyware vendor split the revenue. Edelman has followed up his August 2005 research into spyware receiving payments from Yahoo's Overture by noting an increase in this possible syndication fraud.

"In my August syndication fraud examples, an advertiser only pays Yahoo if a user clicks the advertiser's ad. Not so for three of today's examples. Here, spyware completely fakes a click -- causing Yahoo to charge an advertiser a "pay-per-click" fee, even though no user actually clicked on any pay-per-click link. This is "click fraud," Edelman wrote.

Edelman documented three examples where actual click fraud took place. He named 180solutions, Nbcsearch, and Look2me/Ad-w-a-r-e as culprits in presenting popup ads that defrauded advertisers with Yahoo.


"Spyware syndication falls within the general problem of syndication-based click fraud. Suppose X, the Yahoo partner site, hires a spyware vendor to send users to its site and to make it appear as if those users clicked X's Yahoo ads. Then advertisers will pay Yahoo, and Yahoo will pay X, even though users never actually clicked the ads," said Edelman.

His examples of this click fraud are not guesswork and assumptions. For each case, Edelman provided a full packet log, annontated screenshots, and video of the spyware-based click fraud taking place.

A fourth example of nefarious practices taking place involves the practice of inserting pay-per-click links into text without the consent of the publisher. Edelman displayed one example of this, a story about Iraq from the New York Times website that had a third-party link inserted.

Edelman believes that Overture is the sole funding source for Qklinkserver.com, which inserted the link. He diagrammed the process that took place with this insertion:


(T)he net effect of these practices is that advertisers pay Yahoo, then Yahoo pays Intermix (Sirsearch), then Intermix pays Searchdistribution.net which pays Qklinkserver.com / Srch-results.com.

Intermix, the parent of MySpace, is now owned by News Corp. Intermix has been implicated in spyware schemes in the past, when the company was investigated by New York Attorney General Eliot Spitzer's office before News Corp purchased it.

While News Corp has been publicly cleaning up MySpace, it may need to take a harder look at some of Intermix's other businesses. And Yahoo should be doing these types of audits itself, instead of waiting for Edelman or someone else to do them before correcting a problem.

About the Author:
David is a staff writer for WebProNews covering technology and business.

[mandy]

TechDirt has a short piece on it today too http://www.techdirt.com/articles/20060404/0222211.shtml .It's mainly a reccap of the Edelman article but has a few added links.

A good interview with an 180 Solutions employee was in ReveNews yesterday http://www.revenews.com/jimmydaniels/200...e_out.html

Yahoo and Google both could do a lot more to combat click fraud.

[mandy]

The story continues.  A class action lawsuit was filed against Yahoo alleging click-fraud on May 1st and Ben Edelman who first exposed the problems with Overture is now one of the lawyers representing the plaintiffs against Yahoo/Overture.

Yahoo's self-proclaimed philanthropist co-founder Jerry Yang's company sure does have a funny way of showing its philanthropy doesn't it? (allegedly) Helping dictators send journalists to jail, (allegedly) helping spyware makers defraud advertisers, what a wonderful way for a philanthropist to earn his fortune and show his love of humankind. Come to think of it, his self-proclaimed philanthropist rivals Bill Gates and the Google Boys also have a peculiar idea of helping their fellow man. :twistedevil:

Suit Levels Spyware, Typosquatting Allegations at Yahoo

A class-action lawsuit filed Monday against Yahoo! Inc. and group of unnamed third-parties accuses the company of engaging in "syndication fraud" against advertisers who pay Yahoo to display their ads on search results and on the Web pages of partner Web sites. The suit claims that Yahoo displayed these advertisers' online ads via spyware and adware products and on so-called "typosquatter" Web sites that capitalize on misspellings of popular trademarks or company names.

Potentially more explosive is the plaintiff's claim that Yahoo regularly uses its relationship with adware and typosquatting sites to gin up extra revenue around earnings time, alleging that the company is conspiring to boost revenue by partnering with some of the Internet's seamier characters.

full article: http://blog.washingtonpost.com/securityf...ove_1.html

from the lawsuit:

"Not only have Defendants turned a blind eye to abuse of their [pay-per-click] advertising system, but Defendants knowingly have manipulated that system for their own benefit, by increasing the volume of improper advertising displays during financial reporting periods when Defendants were at risk of failing to meet investor expectations." The suit was filed in federal court in New Jersey

copy of the lawsuit (.pdf format): http://www.washingtonpost.com/wp-srv/tec...ay2006.pdf

[mandy]

A second lawsuit has been filed against Yahoo alleging spyware was used to commit click fraud.

Yahoo Hit With Second Spyware Click-Fraud Suit

Metrodate, like a previous merchant, charges Yahoo and its partners with using spyware to distribute ads and forcing merchants to pay for it.

Another Web site filed a class-action suit against Yahoo Thursday, adding a second filing to the original submitted on Monday that accused the portal of using spyware to distribute ads.

Like Monday's class-action lawsuit, the most recent pits a Web site -- in this case the online dating service Metrodate.com -- against Yahoo, its Overture advertising network, and unspecified third party affiliates. The charges filed by Metrodate in a California federal court were nearly identical to those offered up by New Jersey-based Crafts by Veronica...

full article: http://informationweek.com/news/showArti...=187200890

[Kristijntje]

Update:

Yahoo has reached a tentative agreement to settle a class action lawsuit. The portal and search company agreed to pay millions in attorneys fees and potentially may have to refund millions more in advertising revenue. The settlement, which was given preliminary approval Wednesday by U.S. District Judge Christina Snyder in Los Angeles, calls for Yahoo to pay US$4.95 million attorneys' fees...

The lawsuits may finally be able to prompt the major search companies into action on click fraud, said Skip Pratt, general manager of click fraud tracking firm PPC Trax. "Previously, they really lacked the motivation to tackle the problem," Pratt said...

full article: http://www.ecommercetimes.com/story/NDdn...unds.xhtml