BusinessWeek Online has this article on click fraud -- a practice whereby online advertisers generate phony clicks and charge clients for them. The salient portions of this scam are summarized as follows:
"The spreading scourge poses the single biggest threat to the Internet's advertising gold mine and is the most nettlesome question facing Google and Yahoo, whose digital empires depend on all that gold. The growing ranks of businesspeople worried about click fraud typically have no complaint about versions of their ads that appear on actual Google or Yahoo Web pages, often next to search results. The trouble arises when the Internet giants boost their profits by recycling ads to millions of other sites, ranging from the familiar, such as cnn.com, to dummy Web addresses like insurance1472.com, which display lists of ads and little if anything else. When somebody clicks on these recycled ads, marketers such as MostChoice get billed, sometimes even if the clicks appear to come from Mongolia. Google or Yahoo then share the revenue with a daisy chain of Web site hosts and operators. A penny or so even trickles down to the lowly clickers. That means Google and Yahoo at times passively profit from click fraud and, in theory, have an incentive to tolerate it. So do smaller search engines and marketing networks that similarly recycle ads."
Under North Carolina law, defrauded advertisers could claim for Breach of Contract, Unfair and Deceptive Business Practices (N.C.G.S. ss 75-1.1 et seq.), Fraud, and possibly Civil Conspiracy. Depending on the number of affiliated operators, there could even be a devastating Civil RICO claim, described by one appeals court as "the litigation equivalant of a thermonuclear device". See Katzman v. Victoria's Secret Catalogue, 167 F.R.D. 649, 655 (S.D.N.Y. 1999). Violators could be subject to triple damages or punitive damages under either N.C.G.S. Ch. 75 or under the Civil RICO law.
In recent years, companies such as Google and Yahoo have paid out multimillion dollar settlements to satisfy claims that their "pay per click" advertising campaigns were being conducted fraudulently. Many more claims are pending.