SAN JOSE, CA – An advertising firm has leveled a new lawsuit against Google.com, claiming the company does not do enough to protect its advertisers from “click fraud.” According to Click Defense, which sells online marketing tools and advertises with Google, the search company does not properly warn its advertisers about click fraud and has not taken enough steps to prevent it.Click Defense filed its lawsuit Friday in U.S. District Court in San Jose, California. The lawsuit also seeks class action status.

“We believe the suit is without merit and we will defend ourselves against it vigorously,” a Google spokesman said.

Google claims it credits advertisers who have fallen prey to click fraud.

Click fraud is an industry term for an inherent problem with online per-click advertising models. Search companies like Google and Yahoo allow advertisers to bid on search terms. Advertisers pay the bid amount for each clickthrough that their ad generates. For example, if someone bids $1.00 per-click and gets 100 clicks then they owe $100 in advertising fees to the search engine. The problem is that rival companies sometimes set up programs that click on their competitors’ advertisements over and over again to drive up ad costs. Other companies have employed staff members who are tasked with clicking on the ads of competitors.

Although Google won’t say what percentage of clicks are made with bad intent, according to a recent Reuters story click fraud is usually estimated at around 20 percent of all clicks an advertiser gets. Scott Boyenger, chief executive of Click Defense, pushes that estimate up to as high as 38 percent.

Google had revenue of 1.3 billion in the first quarter of 2005 – virtually all of that revenue came from search ad sales.

Search giant Yahoo was not named in the suit.