June 17, 2009

Microsoft said Tuesday that it filed suit against three Canadians and two associated businesses that the software giant had committed a version of "click fraud".

Microsoft sued Eric Lam, Melanie Suen, and Gordon Lam of Vancouver, British Columbia for breach of contract, torturous interference with business relationships, fraudulent inducement and misrepresentation, computer fraud, conspiracy, and two violations of Washington anti-spyware and consumer laws. Companies named UMGE, Super Continental USA and Super Continental US, both allegedly tied to the trio, were also named, as were 50 "John Doe" plaintiffs.

The complaint accuses the Lams and Suen of abusing Microsoft's adCenter network, specifically exploiting it to benefit their own company, and its ad purchases of keywords associated with so-called "gold farming" in the online game "World of Warcraft," and a separate business reselling car insurance.

The method, according to Microsoft, was a technique known as "pay-per-click fraud".

Advertisers pay a certain amount per keyword or set of keywords to promote their own company when a certain keyword search term is entered, such as "auto insurance". That money is paid out of a budget when a user clicks on the sponsored ad, and is redirected to the site. Once the budget vanished, so would the sponsored ad.

Higher bids receive higher placement, according to the complaint. But the ad is only valuable when a genuine customer visits the sponsoring site. In Microsoft's case, the defendants allegedly either manually clicked competitor's sites, or used automated tools to do so.