Is click fraud a crime? Top lawsuits and how businesses can protect themselves in 2025

Statista predicts that global ad fraud losses will reach $100 billion by 2025, up from $19 billion in 2018. Click fraud is one of the most common types of ad fraud.

It happens when fake clicks are made on pay-per-click (PPC) ads. This drives up costs for advertisers or messes with campaign data. As more businesses utilize digital ads for traffic and sales, click fraud has become a significant problem.

It costs marketers billions every year. But is click fraud a crime? The answer depends on intent, how it is carried out, and the laws in place.

This article will explain the legal aspects, highlight major lawsuits, and provide tips to help businesses protect themselves.

Click fraud explained: Methods and risks

Click fraud is a type of PPC fraud in which individuals, bots, or scripts generate clicks on an ad product or service without a genuine interest in the product or service. Click fraud may occur in different forms, such as:

1. Competitor clicking: Competitors can automatically and manually click on their competitors’ ads to drain their budget.
2. Click farms: Fake clicks are made by groups of low-paid workers or automated systems to generate revenue.
3. Bot traffic: Advanced bots behave like humans to generate fake clicks.
4. Ad stacking and impression fraud: Ads are concealed or overlapped to create a false impression or click.

Is click fraud illegal? Legal perspectives and considerations

Click fraud depends on intent and performance to determine its legality. Although it is not necessarily viewed as a crime, click fraud can be in contravention of laws in certain situations, especially when malicious intent, financial damage, or coordinated actions are involved. The following are important legal factors:

Fraud and misleading practices:

When there is intentional deception to gain financial benefits, click fraud is typically included in the laws governing fraud.

For example, creating false clicks to charge advertisers or blackmail them can result in convictions for wire fraud or mail fraud in the United States, depending on the medium used.

Contract violations:

Advertisers and ad networks operate according to contracts that prohibit fraudulent practices. Click fraud may violate these agreements, potentially leading to civil litigation or account suspension.

In extreme circumstances, these violations can be transformed into a criminal case if they are related to massive fraud.

Cybercrime laws:

Advanced click fraud, which utilizes bots or malware, can be classified as a form of cybercrime. In the U.S., the Computer Fraud and Abuse Act (CFAA) covers this.

For example, creating fake clicks through botnets or zombie computers can lead to criminal charges.

Extortion and blackmail:

Sometimes, fraudsters threaten to use click fraud unless they are paid. A notable case occurred in 2004, when Michael Bradley developed software to cheat Google’s ad system.

He demanded $100,000 to keep it from spammers. He was later charged with extortion and mail fraud. Not all click fraud cases end in criminal charges.

But when linked to fraud, extortion, or cybercrime, they can create legal problems. The lack of a clear definition of “invalid clicks” makes it harder to prosecute.

The Tuzhilin Report notes that it is challenging to define a fraudulent click without leaving room for further abuse.

Notable click fraud lawsuits and precedents

A few high-profile lawsuits have influenced the legal landscape of click fraud, to which ad networks and other parties have been held liable. The most notable ones include:

Google vs. Auction Experts (2005)

Google sued Auction Experts, a Texas publisher, for paying people to click ads on its site. The fake clicks cost advertisers $50,000.
Google was cleared, but the case set a precedent to penalize publishers for click fraud.

Yahoo Class-Action Lawsuit (2005)

In July 2005, advertisers filed a class-action suit against Yahoo. They claimed Yahoo failed to stop click fraud. Yahoo settled for $4.5 million, covering legal fees and advertiser claims.

The case demonstrated that ad networks should implement stronger measures to detect fraud.

Google Class-Action Lawsuit (2006)

In 2006, Google faced a class-action suit from Gifts and Collectibles of Lane, Arkansas. The claim was that Google’s weak fraud prevention caused huge advertiser losses.

Google settled for $90 million, illustrating the significant financial risks associated with click fraud.

FBI’s 3ve Botnet Takedown (2018)

The FBI investigated the 3ve botnet, which faked clicks and video views worth millions. Eight people were charged. The case demonstrated the connection between organized crime and ad fraud, highlighting the importance of law enforcement.

Uber’s Ad Fraud Case (2020)

In 2020, Uber lost two-thirds of its online ad budget to fraudsters. While not a lawsuit, it demonstrated how even major companies can be severely impacted.

These cases demonstrate that click fraud can result in significant financial losses, lawsuits, and even criminal charges.

The impact of click fraud: Statistics and insights

The economic impact of click fraud on companies is substantial, affecting both small and large advertisers. Here are some important statistics showing its effect:

1. Global losses: Business losses due to click fraud are estimated to cost businesses up to $35 billion annually, and it is predicted that ad fraud losses may reach up to $100 billion by 2030.
2. PPC Ad spend waste: Approximately 17% of PPC ad spend is wasted on click fraud, resulting in a reduced return on investment (ROI).
3. Mobile ad fraud accounts for 50% of all click fraud, which is fueled by the booming mobile advertising industry.
4. Small business impact: Small businesses lose an average of $1,000 every month to click fraud, which predominantly impacts small budgets.
5. Consumer distrust: The credibility of digital ads is compromised, with 62% of consumers being skeptical of online ads due to concerns about fraud.
6. Regional disparities: In Asia, 40% of all click fraud is attributed to the expansive growth of digital ads and different regulations.
7. Fraud detection adoption: Fraud detection software is used by 70% of advertisers, which helps lower losses by detecting and blocking fraudulent clicks.

Practical strategies to prevent click fraud in 2025

Due to the high occurrence and high cost of click fraud, companies should employ effective preventive measures. The following are effective measures to reduce the risk:

1. Use fraud detection tools: According to Gartner, AI-based tools such as ClickPatrol can enhance the rate of fraud detection by 40%. Such tools examine click patterns, block suspicious IP addresses, and provide real-time campaign measurements.
2. Monitor campaign metrics: Periodically review click-through rates (CTR) and traffic sources to identify anomalies. According to HubSpot, campaign tracking advances fraud detection by 30%.
3. Implement IP blocking: Blocking of suspicious IP addresses minimizes fraud by 25%. Advertising tools such as Google Ads enable advertisers to place IP blocks to avoid recidivists.
4. Use of blockchain technology: The use of blockchain in digital advertising has increased by 20%, enhancing transparency and accountability in ad sales.
5. Pay attention to high-quality content: Crafting engaging, valuable content reduces the use of vulnerable ad formats, such as display ads, which have 20% higher rates of fraud compared to search ads.

Regulations and industry efforts to combat click fraud

Stronger rules and cooperation are key to stopping click fraud. Statista reports that 50% of consumers want stricter control of digital ads for more accountability.

Global policies have already reduced fraud by 15%, while partnerships between publishers, advertisers, and tech firms have cut it by an additional 25%.

Ad tools like ads.txt and platforms such as MOAT and DoubleVerify have increased ad verification by 30%, helping to confirm genuine campaigns. These steps show that only a joint strategy can effectively fight click fraud.

Safeguarding your digital advertising: Takeaways on click fraud

Click fraud is a serious issue. It can become a crime when it involves deception, money loss, or cybercrime. Lawsuits against Google, Yahoo, and cases like Auction Experts show the financial and legal risks.

With global ad fraud losses expected to reach $100 billion by 2025, businesses should remain vigilant. The most effective defenses include fraud detection tools, meticulous campaign management, and stricter rules.

Advertisers should also utilize legal support and data-driven strategies to safeguard their budgets and ensure the safety of digital ads.

Abisola

Meet Abisola! As the content manager at ClickPatrol, she’s the go-to expert on all things fake traffic. From bot clicks to ad fraud, Abisola knows how to spot, stop, and educate others about the sneaky tactics that inflate numbers but don’t bring real results.

View all posts by Abisola (Abisola)

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