Uber goes on rare legal offensive, suing ad agency for fraud

2017-09-19 11:55 - Eric Newcomer
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San Francisco - Uber is accustomed to getting sued. Now it’s doing the suing. And it’s partly thanks to Breitbart News.

The global ride-hailing company is taking advertising agency Fetch Media to court for click fraud, alleging that the firm improperly billed Uber for “fake” online ads and took credit for app downloads it had nothing to do with. Fetch is owned by the world’s fourth-largest advertising company, Japan’s Dentsu.

Uber filed the lawsuit on Monday afternoon in US District Court in San Francisco. The company said it discovered something was amiss when it cancelled a campaign on the conservative website Breitbart, where Fetch was placing Uber ads.

As part of the lawsuit, Uber plans to seek at least $40m in damages, according to people familiar with the matter, who asked not to be identified disclosing legal plans. Fetch didn’t immediately respond to requests for comment.

Going on the offensive in court is a rare move for Uber. The company is a plaintiff in only two federal cases, according to data compiled by Bloomberg. Meanwhile, it has been a named defendant in about 250 federal cases. The data aren’t comprehensive but show Uber is usually on the defensive.

Online advertising fraud has been a problem for the industry since the dawn of the internet. The practice has grown more sophisticated in recent years along with the amount spent on such ads. Fetch has acknowledged the challenge publicly and said it was working with research firm Forensiq to “fight against mobile ad fraud.”

“One of the biggest challenges we face as digital marketers is to reduce mobile ad fraud,” James Connelly, Fetch’s chief executive officer, said a year ago.

Around the same time, Fetch’s global head of media, Steve Hobbs, told Adweek that a “significant amount” of downloads in Fetch’s system are flagged as suspicious. “Where there’s money, there is fraud,” he told the publication. “Being 100% on top of it is an impossibility, but we think with Forensiq’s help we can get it significantly lower.”

Uber learned of the alleged fraud when it was trying to avoid scandal of a different kind. The company had asked Fetch not to post advertisements on Breitbart News, a site run by President Trump’s former chief strategist, Steve Bannon. But it saw ads appearing there anyway.

Fetch pulled ads from all networks that had a relationship with Breitbart, but the move had little effect on the number of people downloading the app, contrary to Fetch’s claims, the complaint said. Uber pays Fetch and other ad networks a fee when a potential customer downloads its app after seeing an ad.

Uber alleged that after further inspection, Fetch had a widespread practice of over-billing. Uber claims that Fetch had been attempting to claim credit for app downloads it didn’t generate.

“With Fetch, we learned the age-old lesson ‘buyer beware’ the hard way,” the company said in an emailed statement. “Fetch was running a wild west of online advertising fraud.”

From 2015 to early 2017, Uber paid more than $82.5m for advertisements overseen by Fetch, according to the complaint. Uber has refused to pay more than $7m that Fetch has said it owes. Fetch’s publicly traded parent company Dentsu, which has a $12bn market capitalisation, is not named in the lawsuit.

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