Class-action lawsuit accuses Google of improperly withholding refunds for ad fraud
Digital ad fraud in the U.S. is worth more than $7 billion annually, according to third party estimates.
In 2017, Google agreed to provide refunds to selected advertisers using DoubleClick Bid Manager (now called Display & Video 360) where ads were served on sites that had fraudulent or invalid traffic. Reportedly, hundreds of marketers were eligible, but a class-action lawsuit by AdTrader asserts that Google improperly withheld those refund payments, according to the Wall Street Journal (WSJ)
Prior agreement to refund ‘platform fee.’ When the fraud was initially discovered, Google said it would repay its “platform fee,” which typically represents between 7% to 10% of the total value of the ad spend. Some marketers expressed dissatisfaction with the refund scheme. However, according to the WSJ, “Google said it wasn’t in a position to return money that had already flowed from its buying tool to third-party online ad marketplaces where publishers were selling ad space.”
AdTrader initiated the class action suit against Google in California federal court, arguing that Google had “illegally appropriated” promised advertiser refunds. The lawsuit alleges that Google never actually issued any refunds, after reclaiming money from publishers accused of having inflated or fraudulent traffic.
Alleged failure to pay $75 million. Unsealed court documents reviewed by the WSJ apparently reflected that Google had not paid as much as $75 million in potential refunds tied to “ad marketplaces that Google itself owns and fully controls: AdX and AdSense.”
Various third analyst and monitoring firms have estimated ad fraud amounts to more than $16 billion globally. Other reports have different figures. A range of U.S. estimates, including from the Association of National Advertisers, assert that brands will lose between $6 and $7 billion this year on fraudulent (non-human) traffic.
Why you should care. The AdTrader lawsuit is still in process and seeks class certification for agencies and advertisers that used DoubleClick Ad Exchange (AdX) and AdSense during the relevant time frame. It also seeks triple damages and punitive damages as well as injunctive relief against Google. AdTrader accuses Google of being a monopolist and positions itself as a champion of advertiser interests. You can read more detail on the legal and factual claims in AdTrader’s blog post and court complaint (.pdf).