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Recently, an article appeared on CNET stating that Google has filed a lawsuit against a Texas-based company alleging they fraudulently abused the Google PPC system to profit from the advertisers' ad spending.

This is quite interesting, as it proves that click fraud is becoming more of a problem than ever and search engines are finally taking action. As well, there was a case earlier this year where a California man tried to blackmail Google by threatening to release a software program that could cost them millions of dollars in fraudulent clicks unless they paid him $150,000. Fortunately, Google fought back, and the man was indicted. Other than that, this is really the first time that a search engine has taken legal means in order to fight scammers.

Depending on how much you spend on PPC advertising, you may or may not feel the results of such fraud. In some competitive industries, clicks reach a cost of $5 and more. Those particular ads represent the biggest payoff for the perpetrators, so top advertisers definitely feel it when as much as 5% to 15% of their spending goes to waste.

One of the main problems is that Google and other search engines offer revenue-sharing programs, such as AdSense, for publishers who are willing to put Google content ads on their websites. Monitoring thousands and thousands of publishers can be a daunting task, and you can bet that, human nature being what it is, some website owners click on their ads every now and then to boost their revenue. While individually that may not be much money lost, collectively it becomes a huge issue.

Click fraud can also occur in several other ways. Whether it's an automated bot that is programmed to click on your ads, a company employing low-wage workers in India or China to click on ads from home, an organized setup in Omaha, Nebraska complete with rotating IP addresses on all 300 computers in the warehouse, or your own competitor himself trying to deplete your budget, it's getting pretty hard to track and monitor.

I've also observed that most search engines are very secretive about their fraud monitoring systems. While the reasoning behind that is clear, it doesn't really tell us exactly how they are battling the problem. This leaves advertisers on their own to try and figure out what's going on. Luckily, there are tools available, such as Who's Clicking Who and Clicklab that track your advertising activity for you and report any suspicion of fraud.

My personal recommendation would be to carefully monitor your own traffic using a third party service. It's an added cost, but if you spend several hundreds per month on PPC advertising, it'll be worth it. If you notice any unusual activity, don't hesitate to contact the search engine, investigate the issue, and request a refund for those clicks. Most of the time, they will be more than happy to comply with your request.

Unfortunately, I expect click fraud to grow and diversify, so it's important that you have the knowledge and tools to protect yourself against it.

Boris Mordkovich is the editor for a PPC resource site, PayPerClickUniverse.com. PPCU offers articles, reviews, weekly blog, and more to help small businesses get the most out of Pay Per Click.