A class action lawsuit has been filed against Google related to claims that the search giant is stealing money from publishers by shutting down their accounts before paying them.
Last month, a person claiming to be a former Google employee accused the company of such in a very long and detailed explanation on Pastebin. This person claimed that the operation had spanned many years, and alleged that it could “still be happening today on a much wider scale.”
Google strongly denied the claims, calling the whole thing “complete fiction,” and pointing out supposed flaws in the explanation as evidence.
That didn’t stop FairSearch from calling for a criminal investigation into the matter.
“Google often tries to reinforce its image and reputation as a tech innovator rather than an advertising-funded corporation driven by profits,” the coalition, which is made up of Google competitors, said in a statement. “But These recent allegations are another sign that Google’s thirst for profits comes at the expense of meeting its legal obligations and commitments to business partners it says benefit from its own dominance. In the past few years, the company settled for $500 million with the Department of Justice for assisting in the illegal sale of prescription drugs online, and several state Attorneys General have voiced concern over Google’s revenue from ads placed with YouTube videos that depict or promote illegal and other activities harmful to consumers and even children.”
“Trust, but verify is an old maxim that applies to Google’s business too,” the coalition added. “The time may be near for another investigation into Google’s business practices. The outcome could very well be potential criminal and civil charges against the company, especially if top executives were aware of the practice, as they were in the illegal pharmaceutical ad sales.”
Now, we have the class action suit (via TechCrunch) filed by consumer rights law firm Hagens Berman (which recently filed another questionable suit against the company related to phone pricing). The suit claims that Google “unlawfully denies payments to thousands of website owners and operators who place ads on their sites sold trhough Google AdWords.”
The suit was filed in the U.S. District Court for the Northern District of California, and alleges that the company “abruptly cancels website owners’ AdSense accounts often without explanation shortly before payments are due, and refuses to pay for the ads that ran prior to the cancelation.”
“This wrongful practice has sparked numerous bitter complaints from website owners across the Web, with some reporting losses reaching thousands of dollars a pop,” said Steve Berman, one of Hagens Berman’s founding partners. “What we believe to be true from our research is that Google’s practice is likely hurting thousands of website owners and operators who feel they have no way to fight giant company like Google.”
It’s worth noting that after the Pastebin document came out, there were indeed numerous individuals commenting around the web that it sounded suspiciously like what had happened to them, sometimes matching time periods mentioned in the story. You can read some of them in the comments section of our own article about the document. Whether or not any of these claims have merit will apparently be up to the court to decide.
The suit claims that contracts and terms of service Google requires publishers to sign are “unconscionably one-sided, giving Google free reign to embark on what the suit claims are actions devoid of good faith or fair dealing.”
“We have heard from Web publishers who tell us the same thing: Google cuts them off right before a payment is due, and stonewalls them when they object,” said Berman. “Google’s company motto is ‘Don’t be evil.’ Knowing what we know, I think they have a lot of work to do to be true to that goal.”
“Given Google’s contractual terms purportedly permitting it to withhold payment to publishers with disabled accounts, and in light of the experience of the plaintiff in seeing this policy actually effected, the total of earned funds that Google has refused to pay its AdSense publishers could be enormous,” the complaint says.
Specifically, the suit claims Google is violating contracts with users and the “implied covenant of good faith and fair dealing, unjust enrichment, and violation of the California Unfair Competition Law.”
Free Range Content, which operates Repost.us, is the named plaintiff. It claims to have noticed a spike in AdSense earnings in February, and then at the end of the month, Google allegedly issued a report stating that its estimated earnings for the covered period were over $40,000, which it admits seemed “far too high”. Then, in early March, it says, two days before a scheduled call with an AdSense representative, Free Range Content was informed that Google had disabled its AdSense account.
The suit is seeking damages for All U.S. AdSense publishers whose account was disabled or terminated, ahd whose last AdSense program payment was withheld permanently by Google.
Update: Jeff John Roberts at Gigaom points out that Berman has represented Microsoft in the past, and speculates that the company is behind this whole thing. It’s worth noting that the company is a big part of FairSearch.
Image via AdSense (YouTube)