Google Accused Of Denying AdSense Payouts In Fishy Class Action Lawsuit

Last month, an anonymous blogger claiming to be a former employee slammed Google with shaky allegations it canceled AdSense accounts so it wouldn’t have to pay publishers. Despite a strong denial from Google, that claim has been escalated into a class action lawsuit filed on behalf of Free Range Content, a California company that says Google killed its AdSense account in order to withhold payment.

The class action suit claims that Google “unlawfully denies payments to thousands of website owners and operators” and it “seeks damages for all U.S. Google AdSense publishers whose AdSense account was disabled or terminated, and whose last AdSense program payment was withheld permanently by Google.”

But the whole thing smells fishy.

TechCrunch writer Sarah Perez and I concluded the original blog claims were bunk for a slew of reasons laid out below, and Google gave us this statement in April, strongly denying the accusations:

“This description of our AdSense policy enforcement process is a complete fiction. The color-coding and ‘extreme quality control’ programs the author describes don’t exist. Our teams and automated systems work around the clock to stop bad actors and protect our publishers, advertisers and users.

All publishers that sign up for AdSense agree to the Terms and Conditions of the service and a set of policies designed to ensure the quality of the network for users, advertisers and other publishers. When we discover violations of these policies, we take quick action, which in some cases includes disabling the publisher’s account and refunding affected advertisers.”  

When we investigated, here’s what we found. Despite saying they were a Google employee, they didn’t use langauge consistent with Google’s internal lexicon. It purported that “invalid clicks” were used by AdSense publishers’ competitors to get their accounts cancelled for fraud, but Google has sophisticated algorithms to detect this kind of attack.

Functionally, Google is believed to refund advertisers if it doesn’t end up paying their money out to a publisher, so it couldn’t earn money by the supposed scam laid out in the class action suit. And killing off publishers with high lifetime values to Google just so it could get a one-month boost in its revenue is an unsustainable and thereby unwise strategy.

The lawsuit filed by Hagens Berman in the U.S. District Court for the Northern District of California aims to prove Google is in violation of contracts with users and in violation of the implied covenant of good faith and fair dealing, unjust enrichment, and violation of the California Unfair Competition Law.” But this isn’t the first flimsy suit against Google by Hagens Berman. It filed another class action this month purporting that Google is unlawfully keeping smartphone prices high, which was thoroughly and humorously debunked by Android Police. And if our suspicions are correct, this new class action suit won’t get very far. 

[Image Credit: Tambako/Flickr]