Facebook claims that its recent problems with click fraud are behind it but one advertiser is sending Facebook a clear message: your problems are just beginning.

Sports website RootZoo has filed a lawsuit against Facebook in federal district court in San Jose, California and is seeking class action status. The company is being represented by Kabatek Brown Kellner, a law firm with a history of litigating click fraud actions.

Like other advertisers who complained, RootZoo alleges that there were significant discrepancies between the number of clicks it received through Facebook’s self-serve PPC ad platform and the number of clicks it was charged for. According to RootZoo’s complaint, on a single day, Facebook billed it for 804 clicks when its own logs showed only 300. RootZoo claims that Facebook has refused to provide its own logs for review or to issue a refund.

Facebook has dismissed RootZoo’s claims as being “unnecessary and baseless“.

Officially, Facebook says that the recent problems with click fraud have been addressed. Although some went so far as to suggest that Facebook was artificially inflating click counts, there is a technical explanation as to how Facebook could register a click while the tracking systems on advertiser websites didn’t: an automated bot could send a request to Facebook, generating a ‘click‘ but then terminating before the redirect generates a request on the advertiser’s server.

While it’s far too early to predict where RootZoo’s lawsuit will lead, two points should be made:

  • This is potentially a significant blow to Facebook. Its self-serve PPC ad platform generates a sizable chunk of its revenue and this entire situation is certainly raises questions about Facebook’s ability to run a decent PPC service. Facebook cannot afford a loss of confidence at this stage of its development. Additionally, it’s worth considering that historically, there have been quite a few reports that ROI is difficult to extract from Facebook; for advertisers on the fritz, fraudulent activity has the potential to turn Facebook into a lost cause. If fraud contributes to enough advertisers throwing in the towel, look out.
  • Facebook may not be taking action against the scammers. According to a post on TechCrunch, how scammers are engaging in click fraud on Facebook is now common knowledge. Unfortunately, TechCrunch reports that Facebook may not be shutting down the thousands of accounts that scammers set up to engage in click fraud. If true, this could be very problematic, especially as far as Facebook’s legal defense is concerned.

The lesson in all this is that running a self-serve ad platform like AdWords has become a big business for Facebook but reality has struck: if you’re going to take people’s money, you had better be prepared to defend yourself when they think they’ve been given the short end of the stick.

Photo credit: tjshirey via Flickr.