Inside Google

SANTA MONICA, CA — Consumer Watchdog praised the U.S. Justice Department today for forcing Google to forfeit $500 million because it allowed illegal drug ads through its AdWords program, but said the problem of predatory and deceptive advertising on the Internet giant’s services continues. Further enforcement action by regulators is needed, the group said.

“Google is highly motivated to turn a blind eye to all sorts of dubious advertising on its search engine because AdWords is such a cash cow,” said John M. Simpson, director of Consumer Watchdog’s Privacy Project. “For example, our study earlier this year found Google has become a leading purveyor of ads by scammers who prey on struggling homeowners.”

Read the nonprofit, nonpartisan group’s study, “Liars and Loans: How Deceptive Advertisers Use Google” here:  http://www.consumerwatchdog.org/resources/liarsandloansplus021011.pdf

The illegal drug ads settlement, one of the largest ever in the United States, was announced Deputy Attorney General James M. Cole; Peter F. Neronha, U.S. Attorney for the District of Rhode Island; and  Kathleen Martin-Weis, Acting Director of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA/OCI).  The $500 million represents the gross revenue received by Google as a result of Canadian pharmacies advertising through Google’s AdWords program, plus the gross revenue made by Canadian pharmacies from their illegal sales to U.S. consumers.

Consumer Watchdog said that Google has repeatedly shown itself unwilling to take a proactive roll in monitoring the the appropriateness of advertisements before they are posted.

“The problem is they want to do everything with an algorithm so they can ‘scale’ the process,” said Simpson. “When it comes to screening for bogus ads you need a lot more human involvement.  Without the big stick of vigorous regulatory enforcement,  neither Google nor other Internet companies have the incentive to clean up their act.”

In the wake of the drug ad settlement Consumer Watchdog reiterated its call from earlier this year for the Federal Trade Commission to stop the Internet giant from hosting fraudulent ads targeting struggling owners.  In February Consumer Watchdog wrote FTC Chairman Jon Leibowitz:

“Because Google so far has turned a blind eye to these fraudsters, perhaps because of the substantial revenue such advertising can generate, we ask that the FTC investigate Google’s role as a facilitator of deceptive and fraudulent advertising and act to prevent the Internet giant from continuing its harmful behavior.”

– 30 –

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org