Ex-Google Advertiser Sues Over Settlement

Radiator.com director of Internet marketing John Thys checks his company's inventory in Benicia, Calif. on Wednesday May 3, 2006. Thys can't figure out how much his company has paid Google Inc. for bogus sales referrals, but he's convinced the Internet search king should be refunding a lot more money than what's being offered in a proposed class-action settlement affecting thousands of advertisers nationwide. (AP Photo/Marcio Jose Sanchez) (Marcio Jose Sanchez - AP)

MOUNTAIN VIEW, Calif. -- A former Google Inc. advertiser sued Wednesday to block a proposed $90 million class-action settlement, arguing the amount grossly understates how much the online search engine leader has benefited from a ruse known as "click fraud."

The complaint, filed by Joseph Kinney in Arkansas state court, targets two small businesses _ Lane's Gifts & Collectibles and Caufield Investigations _ leading a class-action lawsuit filed on behalf of thousands of merchants and entrepreneurs who have bought ads through Google's search engine since 2001.

The class action suit alleged Google and its advertising partners have improperly profited from click fraud.

This alleged sham takes different shapes, but the end result is usually the same: Merchants are billed for fruitless traffic generated by scam artists and mischief makers who repeatedly click on an advertiser's Web link with no intention of buying anything.

Although it has denied any wrongdoing, Google in March agreed to settle the class action for up to $90 million. As much as $30 million could go to a handful of attorneys who filed the class action. Whatever is left over would be refunded to thousands of advertisers in the form of credits.

Attorneys for former Google advertiser Kinney, a Pinehurst, N.C. security consultant, hope to convince a judge to block the $90 million settlement on the grounds that the amount shortchanges the class.

If the lawyers who settled the class-action case are paid $30 million, advertisers would be left with a refund pool that represents less than 0.5 percent of the $13.3 billion in ad revenue that Google has collected during the past 4 1/4 years.

The attempt to block the settlement is being orchestrated by a group of lawyers who had previously filed a similar click-fraud suit against Google in California federal court.

The California case has been suspended while the Arkansas courts deal with the proposed $90 million settlement, which is scheduled to be considered for final approval in two-day court hearing beginning July 24.

In a statement, Google said the lawyers in the California case "are trying to circumvent the normal class action process which we believe is inappropriate. We question if this lawsuit may be motivated more by the quest for attorneys' fees than pursuit of what's best for class members."

Stephen Malouf and John Goodson, two of the lawyers who negotiated the $90 million settlement, hadn't returned phone messages as of late Wednesday afternoon.

Kinney, who runs Safespaces.com, stopped advertising with Google in September 2005 because he believed his bill had been bloated by click fraud, according to the lawsuit.

Google is supposed to e-mail notices of the proposed settlement later this month. The company has option to nullify the settlement if advertisers that supplied more than 5 percent of its revenue since 2001 reject the agreement.