How we define fraud?

In a class action suit filed against Facebook last July in California, plaintiffs stated that advertisers should be able to sue Facebook for invalid and fraudulent ads that were specifically designed to raise the price of advertising on the site. Click fraud, as it’s commonly called, is often used by competitors to drive up the price of an advertisement, making it less profitable for a company to post ads on Facebook, Google, or other advertising-based websites.

Ultimately, the offenders hope to drive their competitors off the site or even out of business.

Click fraud is actually a felony in California, where this suit was filed, but that doesn’t necessarily mean that Facebook has been enforcing such rules. In fact, Facebook argues that they are not responsible for click fraud because their contracts with advertisers specifically states that third-party organizations “may generate impressions, clicks, or other actions affecting the cost of the advertising for fraudulent or improper purposes, and I accept the risk of any such impressions, clicks, or other actions.”

In other words: it’s a free for all.

The court decided partially in Facebook’s favor. According to the ruling, advertisers cannot sue Facebook over “fraudulent clicks.” They can, however, sue Facebook over “invalid clicks.” That doesn’t seem to make a lot of sense, considering that click fraud is illegal.

The court’s decision also means something else for those who advertise on Facebook: they can subpoena Facebook for information about invalid clicks. Until the court’s ruling, advertisers did not necessarily have access to this information, which  was considered Facebook’s private property.

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~ by facebookhoaxes on August 22, 2010.

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