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Google Sued for Running Fraudulent Ads

Eric Goldman has an analysis of a lawsuit against Google, for permitting ads on its google adsense network which advertised for a fraud.

"Today's misdirected lawsuit involves "fraudulent mobile subscription services," which are optional third party services for cellphones (such as ringtones) that are charged on a periodic basis.

The plaintiffs in this putative class action lawsuit feel like they got fleeced by providers of these subscription services. If they did, I hope they get appropriate redress from the wrongdoing vendors.

But instead of suing the allegedly fraudulent vendors, the plaintiffs think Google should cover the losses for the sole reason that Google ran ads for the services."

It used to be that newspapers ran fraudulent business opportunity ads in their classified sections.

I am not aware of any American or Canadian case which held the newspaper liable for negligence.

Indeed, among the FTC's guidance on advertising, there is no specific mention of false advertising for business opportunities or franchises.

Eric suggests that the fate of this lawsuit, and so its untenability, lies in the defence provided by 47 USC 230, which essentially allows blogs and other media to disclaim responsibility for comments placed by third parties on their blog or media.

Now, I not sure about this. While I think that 47 USC 230 does provide some protection, it seems that what the plaintiffs are complaining about is the extent of the contractual liability afforded to third parties offered by Googles' Terms of Service for the Adsense program.

Google and the advertisers entered into a contract, which likely prohibited the advertisers from engaging in the fraud the plaintiffs complain about.

Now, when should this contractual liability be extended to third parties, if those parties can prove Google was negligent in its exercise of review of the advertiser's compliance?

Or should the plaintiffs have to prove recklessness? Interesting problem.

(Thanks for Shoemoney for pointing this lawsuit out to me. )

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Full post as published by Misleading Advertising Law on June 06, 2008 (boomark / email).