Microsoft chases 'click laundering'

IDG News Service - Microsoft said it has uncovered a new kind of click fraud, filing two lawsuits against people it says are using the scam.

One of the suits, filed in the U.S. District Court for the Western District of Washington, accuses the Web site RedOrbit.com and the site's president Eric Ralls, of using click laundering, a term Microsoft came up with to describe a new way of boosting the number of clicks on advertisements on a Web site.

"What was at one point thought to be highly or almost impossible to do, we have uncovered it is technically possible to do," said Richard Boscovich, an attorney in Microsoft's digital crimes unit.

Microsoft accuses RedOrbit, which was once an approved site on its AdCenter network, of using botnets and so-called parked sites to dramatically drive up the number of clicks on ads on the RedOrbit site.

But rather than simply use the botnets and sites to direct clicks to ads on RedOrbit.com as fraudsters commonly do, RedOrbit directed the traffic to its own servers where it scraped out the traffic referring information and replaced it with code that made it look like the traffic came directly to the approved RedOrbit site, Microsoft says.

"That was a unique feature. This is the first time we've seen this occur," Boscovich said.

Parked sites are sites with little value that typically only include long lists of links or search bars that return lists of links.

Microsoft said it discovered the potential fraud early in 2009 when it noticed hits from RedOrbit.com spiked from an average of 75 a day to around 10,000 a day, said Brad Smith, general counsel for Microsoft.

Ralls did not reply to a request for comment. However, the SeattlePI reported on Monday that he said he was unaware of the lawsuit and maintained that he did not engage in click fraud.

Microsoft is confident that RedOrbit is responsible for the fraud since it is the company that stands to profit from the fraud, said Boscovich.

In addition to RedOrbit, the suit names 10 John Does because Microsoft believes that other people may have been involved with carrying out the alleged fraud.

Microsoft filed a separate suit in the same court against 20 unnamed people related to fraud on sites operated by HelloMetro. Microsoft hopes that since it has filed the legal action, it will be able to identify the people involved through the discovery process, Smith said.

HelloMetro did not immediately reply to a request for comment.

"We believe that although these are the only two cases we've identified, based on our traffic quality team, they think it's a much bigger problem," Boscovich. said.