Jury Orders $2.3 Million Payment in Search-Ad Click-Fraud Scheme

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A Texas jury last week ordered TriMax Media, a digital advertising agency specializing in search engine marketing, to pay one of its competitors $2.3 million for what jurors agreed was an elaborate click-fraud scam.

The lawsuit stemmed from actions taken by TriMax, after it lost a client to the competitor, a company called Wickfire. TriMax began bidding on search terms associated with Wickfire clients and clicking on those ads in search results, Wickfire alleged in a 2014 lawsuit, driving up clients' search advertising costs. TriMax performed similar actions against 140 Wickfire clients, the lawsuit said.

Chet Hall, CEO and founder of Wickfire, told Ad Age that his clients became frustrated over the small returns they got from their ad spending, even though it seemed like potential customers were clicking on their ads. "People couldn't believe it," he said. "I had to spend months talking to them."

TriMax also created false Google AdWords accounts in the names of key WickFire employees and used them to buy fake ads that looked like they were coming from Wickfire, the lawsuit alleged. That made it appear as if Wickfire was in direct violation of contracts with its clients, affiliate networks and Google, according to the lawsuit.

TriMax did not respond to repeated requests for comment on Thursday.

Mr. Hall said he doesn't believe that kind of behavior is rampant in the search advertising industry, but that it does happen.

"This was about finding the truth about activities that happen across the industry and putting an end to it," Mr. Hall said. "We had to get help from a lot of third parties like Google, Verizon and AT&T so we could connect all the dots. One of the reasons this type of activity goes on in this industry is people think they are anonymous and can't be tracked online."

One big obstacles for the plaintiffs was explaining something as complicated as search advertising to a jury, according to Lexie White, a partner at Susman Godfrey who represented Mr. Hall.

But lawsuits related to search advertising are not new. Last August, the Federal Trade Commission filed an administrative complaint against 1-800-Contacts, alleging that the online retailer pressured other marketers out of competing with its search ads.

Wickfire's lawsuit alleged false designation and unfair competition, injury to business reputation, business disparagement, defamation, tortious interference with an existing contract, tortious interference with business relations, unfair competition and misappropriation. The jury delebrated for two hours before siding with the plaintiffs on each point. It also found that TriMax CEO Lauren Woodruff violated the Lanham Act and interfered with Wickfire's client contracts.

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