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This week a San Jose federal judge approved a settlement in the class action click fraud suit brought against Yahoo from several advertisers looking to recuperate $5 million in legal fees and credits for fraudulent clicks that date back nearly three years.

Yahoo Click Fraud Settlement Approved

In a similar agreement last year, Google agreed to pay $90 million ($30 million in legal fees, $60 million in click reimbursement) to Caulfield Investigations, representing Lane’s Gifts & Collectibles in Arkansas, claiming they had been victims of click fraud. Opposing attorneys continued pressing the issue after the settlement, however, claiming that the compensation package was inadequate.

Settlement in the California case had been delayed due to protest from the same Arkansas group, alleging that Yahoo was not operating in good faith concerning the case in that state. With the judge’s ruling this week, however, Yahoo is now free and clear from any other click fraud claims against it in other states.

In addition to the legal fees, Yahoo outlined these additional measures in the terms of settlement:

One-Time Extended Claims Period: Yahoo! will offer advertisers a one-time extended claims period during which advertisers can submit click fraud claims for clicks dating back through January 2004. If our investigation determines that a credit is due that was not given previously, we will issue a 100% credit, which can be used however the advertiser wishes to use it. This claims process will be overseen by a retired Federal judge.

Dedicated Traffic Quality Advocate: Yahoo! will appoint a Traffic Quality Advocate who will be dedicated entirely to addressing advertiser concerns about click fraud and traffic quality issues. This advocate will serve as the internal voice of the advertiser within Yahoo! on these matters.

Annual Access to CTP System and Team: To ensure that the advertising community has ongoing visibility into our Clickthrough Protection system, Yahoo! will host a panel of individual advertisers at our CTP headquarters once a year. During these visits, we will allow the advertisers to review our systems, meet with the CTP team and provide feedback on how we can continue to enhance our approach to fighting click fraud.
Industry-Wide Click Protection Efforts: Yahoo will work with a reputable third party toward building industry-wide efforts to combat click fraud, including development of industry-wide definitions of click fraud and a comprehensive lists of identified bots.

Traffic Quality Resource Center: Yahoo! will commit technical and human resources to build a Traffic Quality Resource Center, which will provide advertisers with more detailed information about traffic quality issues (including click fraud) and solutions via FAQs, advice columns, best practices guides and additional access to analytics tools.
Traffic Quality Inquiry Response Times: Yahoo! will provide advertisers who submit click fraud- or traffic quality-related inquiries with a time by which they will receive the results of Yahoo!'s investigation or, if the investigation is particularly complex, a status update.

Additional Traffic Quality Refund Detail: To provide advertisers with more clarity around refunds for click fraud and other traffic quality issues, Yahoo! will include additional detail in advertiser refund notices.

"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," says new Yahoo click quality czar Reggie Davis in a CNET article covering the settlement.

"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."

Davis was appointed to his post as Vice President of Marketplace Quality earlier this month as Yahoo looks to offer greater transparency to the issue of click fraud and address any concerns that its advertising partners may have.

Yahoo has estimated that, on average, it filters out anywhere from 12 to 15 percent of clicks due to fraud. This is just what Yahoo managed to catch, however, and isn’t indicative of any fraudulent clicks that slip past the company’s sensors and end up hitting advertisers in the pocketbook.