A $400,000 pay per click fraud loss

Inc. Magazine's web site is featuring a click fraud story where Kevin Steele, co-owner of Karaoke Star, a Phoenix retailer of karaoke equipment estimates that click fraud from a competitors has cost him nearly $400,000.

He normally spends $2,000 to make $6,000 in PPC advertising, when it started costing him $2,000 to make $3,000 he started getting suspicious. He got lucky and a supposedly an ex-employee of the competitor in question sent them a film showing an automated hitbot in use that was clicking Steele's PPC ads. Is this ex-employee a whistleblower or have they just cooked up a home video to get back at a former employer?

Steele has gotten all lawyerd' up and is now intending to sue the competitor in question AND Google and Overture. Why?

Because Google and Overture make the most money from click fraud and have the least amount of incentive for taking simple precautions to prevent the fraud

Well I would be upset to if I had been through the loss that Steele was through only to have the PPC networks get tight lipped on you...and this is your advertising 'partner'. Here is what happened straight from the article:

The problem is, getting a search engine to hand over a record of your advertising activity is no easy feat. Search engines treat such data as proprietary and are loath to share it. Karaoke Star’s Steele and Frerick, for example, expressed their suspicions to Overture and were given some 'token' refunds, Steele says. But Overture steadfastly refused to tell them who was behind the bogus clicks. Nor would it give Karaoke Star the data it needed to figure it out itself.

Full story: So Many Clicks, So Few Sales