Thursday, July 27, 2006

"Click Fraud" Ethics

Google has agreed to pay $90 million to settle a click-fraud class-action lawsuit. This amount easily appears small when compared to the estimated $1.3 billion in estimated fraudulent advertising fees. It also brings another blow to Google investors who have lost around $80 per share or around 17% YTD. For an industry plagued with uncertainty and an era plagued with dishonesty, ethical principles seem to have been swept under the proverbial rug.

While morals are easy to define, ethics are very different. Ethical questions attempt to give answers to the many grey areas that lie between morals and laws. Correct answers can lead us to success, but incorrect answers lead to the skeletons that are the only remains of Enron or Arthur Andersen. Technology has many amazing capabilities that have served to help the overall business process, but it has also increased the speed and ease of fraud.

Internet advertisers pay billions of dollars to strategically place their ads all across the web in hopes that it will bring them a return on their investment. Each time one of these ads is clicked an amount is charged to the advertiser and portioned between the advertising agency and the ad-hosting site. Click fraud is a click that occurs either for personal gain or in an effort to force the advertiser to pay additional fees.

The problem that allows this click fraud to occur is the lack of identity. When a credit card is used to make a purchase there is a record to track the transaction. When the transaction record is reviewed it is easy to spot double-charges or incorrect charge amounts because each vendor and each transaction has a unique identifier associated with it.

Information Systems are capable of tracking amazingly vast amounts of information. Each computer's network interface card is assigned a unique MAC address. This and other identifying information is passed to web servers when information is requested from a website. Without much difficulty, then, advertising agencies could track not only the number of clicks, but also the identities of the clickers. This would prevent the chance of multi-clicking to force additional charges to the advertiser. Also, this would prevent the search engine from using any of its own computers to raise the number of clicks.

Other important information to the advertiser is the location where the advertisement is placed. Since many websites are making money by acting as proxy advertisers by simply posting an 'Ads By Google...' area to their site they are also capable of encouraging false clicks in order to drive revenue to their site. While computer identifiers would prevent multi-clicking the click source is also a useful part of the action. By tracking this information, a company can see what websites are recruiting the most clicks. With this information they could easily visit the site themselves to see if the site is truly popular or if they are encouraging clicks for their own gain.

Any time we are working with information technology there is also the opportunity for fraud. Network interface cards have unique MAC addresses, but these unique identifiers can also be masked with what is referred to as MAC spoofing. While this is not necessarily easy to do if it is required to be changed for each associated click, it is very possible.

While this problem could initially be fixed by using cookies to identify the visitor, these can also be removed or simply prevented from being placed on the user's computer.

It would seem that our current situation remains without an answer. Click fraud and others will continue to occur because of the natural disconnection of identity that inherintly lies between technology and the person operating it. While we could try to connect a user's identity with their computer this would only open doors to many other forms of even more detrimental forms of fraud.

We are therefore left again to ethics. We rely on honesty and integrity because those are the values that improve our world society. We can always pursue answers to ethical questions in order to write or rewrite our social code of conduct, but policies don't change people – people change people.


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