Google Advertiser Class Action Over Refund Failures Following Account Shutdowns Settled for $7M

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Update:

• The U.S. District Court for the Northern District of California has preliminarily approved a $7 million settlement between Google and a group of advertisers. 
• Google agreed to the settlement to resolve claims it failed to refund advertisers and their clients after it removed their accounts.
• Ad Trader Inc. filed the complaint against Google in 2017, arguing Google failed to refund its balance of $500,000 after it closed the advertiser’s account. 
• Google reportedly shut down advertisers’ accounts if it found their advertising traffic was invalid. 
• A hearing to determine whether final approval should be given for the settlement has been scheduled for Oct. 27.

(Dec. 15, 2017)

Google LLC has been hit with a class action lawsuit alleging it refused to offer full refunds to advertising publishers whose ads received a significant number of clicks that were generated by bots.

Plaintiff AdTrader Inc., which uses online advertising platforms to help web publishers monetize their content, filed an individual Google lawsuit claiming the tech giant failed to honor its commitment to pay AdTrader for the advertising revenue Google received from placing ads through the DoubleClick Ad Exchange (AdX) on AdTrader’s publishers’ websites.

AdTrader’s complaint is also a Google class action lawsuit challenging Google’s allegedly false promises that it would refund or credit advertisers if Google determined that any ad impressions for ads served through the DoubleClick Ad Exchange were invalid.

“For years, Google has claimed to aggrieved AdX publishers that it was not contractually obligated to pay out their accrued avenues, regardless of whether Google’s reasons for withholding such payment were justified, because Google had automatically refunded such revenues back to its advertisers,” the Google class action lawsuit says.

“Google’s representation, however, have turned out to be untrue from the very beginning. Many of its advertisers never got any refunds (or even credits) when their advertisements were run on websites that Google later claimed to have fraudulent or invalid activity,” AdTrader continues in the Google class action lawsuit.

“Instead, Google kept for itself all of those funds, as it refused to pay out anything to the AdX publishers that ran the websites displaying such ads with the supposedly invalid activity.”

The Google class action lawsuit points to an Aug. 25, 2017 article in The Wall Street Journal in which advertisers reportedly revealed that Google only offers a refund of up to 10 percent of the amount the advertisers spent on invalid traffic.

AdTrader alleges that, in May 2017, Google disabled its DoubleClick Ad Exchange account without clearly explaining why, and withheld around $500,000 of AdTrader’s accrued AdX earnings. When AdTrader asked for a refund, Google allegedly told the company that it would not make payments to AdTrader because it had already refunded the withheld earnings back to the advertisers whose ads were displayed on AdTrader’s content publishers’ websites.

The Google class action lawsuit asserts claims for breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, fraud, negligent misrepresentation, unjust enrichment, and unfair competition.

AdTrader is seeking compensatory and special damages, treble damages, punitive damages, declaratory relief, restitution, permanent injunction, pre-judgment interest, attorneys’ fees and costs, and other relief the court deems proper.

This is not the first time that Google’s advertising practices have been challenged. Earlier this year, the tech giant agreed to pay $22.5 million to resolve allegations that it failed to disclose to Google AdWords customers that advertisements would be placed on parked domains and error pages.

AdTrader is represented by Randolph Gaw, Mark Poe, Victor Meng and Samuel Song of Gaw Poe LLP.

The Google DoubleClick Ad Exchange Class Action Lawsuit is AdTrader Inc. v. Google LLC, Case No. 5:17-cv—7082, in the U.S. District Court for the Northern District of California.