Micrososoft recently announced that it was suing several companies that it claims have perpetrated click fraud on Microsoft ad networks. This ad fraud wasn't something detected by Microsoft. Instead, advertisers reported suspicious activity to Microsoft, which was spurred to investigate. That spelunking revealed companies gaming Microsoft's ad system for their own profit.Unfortunately, fraud is rampant in online advertising. and it's hard to tell just how bad the problem is. One company estimates that about 16 percent of ad clicks were fraudulent in 2008. The companies with the best data, the ad networks themselves, aren't about to reveal the depth of the problem. When customers complain, as they did in this case, I don't doubt that the ad networks make an honest effort to investigate. That may not be enough, though.

During several months in 2005, I investigated dozens of cases of ad-fueled spyware, including the infamous Direct Revenue. Many of those examples were financed by either Yahoo's Overture or by Google AdWords. The modus operandi for most of those cases were through aggressive popups, which often violated the Yahoo or Google terms of service. Yet these violators would run for weeks until a spyware investigator would report them. Google and Yahoo weren't finding these cases, and they were profiting from it.

It seems like there is an analogy between click fraud and credit card fraud. Both require vigilance on the part of customers, but as the first line of defense the networks need to provide their own strong fraud prevention techniques to assure customers that the clicks they receive are really from customers, not criminals.