A federal judge in San Jose, Calif., has given final approval to a settlement in a class action lawsuit over click fraud that requires Yahoo to pay nearly $5 million in attorney fees and give full credits to advertisers dating back to 2004.
The judge's action on Monday settles claims by Checkmate Strategic Group that Yahoo charged advertisers for clicks on online ads that were fraudulent or done in bad faith.
The settlement agreement was given preliminary approval by the court last summer. However, attorneys involved in a class action suit over click fraud in Arkansas contested the settlement arguing that Yahoo was not responding to the Arkansas lawsuit in good faith when it was settling the case in California. The California settlement releases Yahoo from all similar click fraud claims against it in other actions, including the Arkansas litigation.
The "final approval of the settlement validates the strength of Yahoo's click-through protection systems, and our commitment to delivering a quality experience to both our advertisers and our consumers," said Reggie Davis, Yahoo's new vice president of marketplace quality. "Our commitment does not stop here. Quality is a top priority for Yahoo, and we have a clear road map for how we're going to create the highest-quality search-advertising network in the industry."
An Arkansas judge gave final approval last July to a $90 million settlement Google reached with lawyers for Lane's Gifts & Collectibles and Caulfield Investigations. In that settlement, Google is to pay $30 million for lawyer fees and $60 million in ad credits to affected advertisers. Opposing attorneys also challenged that settlement as being inadequate compensation.
Click fraud typically occurs when ads are clicked on by humans or automated software to either boost the revenue to the Web sites they appear on or to deplete the ad budget of the marketer by rivals who may want to acquire the keywords themselves.