Click fraud is a hot topic in Internet marketing these days. To be honest I haven't really kept up to date with it because I haven't managed any large campaigns lately. My past experience is that Google and Yahoo! were pretty aggressive in alerting me to click fraud and providing refunds. However, what I think was really happening is they could ID good traffic, ID fraud, but there was a significant gray area that they are more than happy to turn a blind eye to. The theory being if they placate advertisers with some token refunds we won't go after them for big bucks. Let's face it they have all the incentive in the world to allow click fraud – they get paid on it.
Recently I've started to look at some of the member sites within their search network and that's eye opening. You want to opt in to the search network because in Google's case that means you get AOL distribution and until MSN launched its own platform Yahoo! used to feed them. Go check your log files and look at some of the crap search domains that are sending traffic to your site. And Google's account team recently read me the party line that they have identified a segment web users that prefer these sites to Google's search results – bullshit!
I think I'm going to opt out of their extended networks for the time being, my guess is that it's much harder to get bit by click fraud if you're only distributed on the primary sites. From an Internet marketing perspective that will yield the best ROI and provide some nice clean data which can allow for some before and after comparisons.
Here is a link to the BusinessWeek article from October 2nd, Click Fraud – The Dark Side of Online Advertising. I haven't read it but did listen to the podcast from iTunes while jogging this morning.
Here's a click fraud article by neal who leveraged some info from Search Engine Marketing, Inc.
http://www.marketingpilgrim.com/2006/10/bob-and-weave-click-fraud-thieves.html