Posted by Bill Harmon
Associate General Counsel, Microsoft Digital Crimes Unit

As you may recall, earlier this year Microsoft’s Digital Crimes Unit filed a lawsuit in the U.S. District Court for the Western District of Washington naming RedOrbit Inc. and its president, Eric Ralls, in a case in which we believe they defrauded Microsoft’s ad platform adCenter through a sophisticated form of pay-per-click ad fraud we call “click laundering.” 

Today, based on our continued investigation in this case, we have sought leave of the court to amend our complaint to add the software and technology company Vertro Inc. as another defendant involved as an upstream provider of illegitimate click traffic for RedOrbit. For more information, you can read the amended complaint we filed today.

Online ad fraud hurts all participants in the online marketplace.  Advertisers lose their money and the opportunity to share their voice with customers. This is unacceptable to Microsoft. Ad fraud hurts consumer choice and undermines the trustworthiness of the Internet as a safe place to do business – endangering the entire ecosystem of ad-supported online websites and services. Industry reports currently estimate that roughly a quarter of all clicks online are fraudulent, but given that this kind of fraud can be difficult to detect, the actual rate may well be greater than those estimates. 

As our general counsel, Brad Smith, recently said, "We and every other company in the industry have to recognize that we have a choice. We can either take aggressive steps to stop this fraud or look the other way and make money from it. We don't think looking the other way should be an option."

Click fraud is a type of Internet fraud in online advertising that occurs when a person, automated script or computer program imitates a legitimate website visitor by clicking on an ad to generate a charge-per-click without having actual interest in the target of the ad’s link. Click laundering is a sophisticated and difficult-to-detect form of click fraud we’ve uncovered in which technical measures are used to mask the true origin of a click and actually make invalid ad clicks appear to originate from legitimate sources.  Click laundering attempts to avoid fraud detection systems that have been put in place by the ad platform — in this case, Microsoft adCenter — to protect online advertisers from paying for fraudulent clicks.

Microsoft monitors traffic on Microsoft adCenter closely to prevent advertisers from being charged for non-valid clicks. We’re also applying our deep experience in digital crime investigation, legal expertise and understanding of how digital criminals operate to both continue to advance our detection capabilities and take legal action when necessary. With this work, we aim to send a clear message to would-be fraudsters that Microsoft Advertising is not a smart place to try to commit fraud and that we can and will take action to protect our advertisers. 

I believe the future of the Internet rests on the industry’s ability to drive greater integrity in the online economy. That’s why, when it comes to online advertising, my team is working hand-in-hand with the Traffic Quality team in Microsoft Advertising to make sure that when advertisers use Microsoft adCenter, they get what they pay for. 

For more information about Microsoft Advertising, visit http://advertising.microsoft.com. And for more information about the Digital Crimes Unit, I welcome you to follow us at http://www.facebook.com/MicrosoftDCU and http://twitter.com/MicrosoftDCU.