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Man charged over click fraud scheme

Robot program takes FreeRide for a ride

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A US man has been charged with conspiracy, mail fraud and wire fraud over a 'click fraud' scheme allegedly carried out against an internet firm that rewards subscribers who complete online surveys and view banner ads.

US Attorney Kevin Ryan said Allen Tam, of Daly City, California, was indicted on Tuesday, after an investigation by the Federal Bureau of Investigation.

Click fraud is a general term that describes the practice of skewing pay-per-click data by generating illegitimate 'clicks' or 'hits' on internet ads. It is more often discussed in connection with search engine ad schemes, such as Google's AdSense Service, where unscrupulous website owners sometimes try to increase the fees paid to them by Google by ensuring that third party adverts displayed on their site are clicked as often as possible.

This case, however, concerns internet firm FreeRide, which at the time of the alleged scam offered a rewards program to internet users based on various online activities that subscribers engaged in on the firm's website. These activities included viewing internet advertisements (or banner ads), completing consumer surveys, and purchasing products online.

According to the indictment, Mr Tam, 32, is alleged to have obtained computer source code from his employer and to have used that source code to develop a robot program which could then be used on FreeRide's website.

The indictment alleges that between 2000 and 2002 Tam used the robot program to fraudulently generate and accumulate FreeRide points by emulating activities on FreeRide's website. The indictment alleges that Tam then redeemed those FreeRide points for products offered for sale by other internet retailers, including Amazon.com.

If found guilty, Tam faces a maximum of five years in prison and a fine of $250,000 in respect of the conspiracy charges and all but one of the mail fraud and wire fraud charges. However, because one alleged mail fraud violation and one alleged wire fraud violation occurred after the passage of the Sarbanes-Oxley Act, he faces a maximum of 20 years in prison and a fine of $250,000 in respect of those charges.

Copyright © 2006, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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