The latest case to be filed against Facebook, Inc. alleges that the company systematically inflates both the prices for cost-per-click (CPC) advertisements and the user data metrics reported to advertisers.
First Things First: Facebook’s CPC and CPM Options for Advertisers
The complaint explains that most advertisements on Facebook target people who use the company’s mobile app. Advertisers who pay for ads on a cost-per-impression, or CPM, basis, the lawsuit says, pay a fee “each time their ad is published on Facebook’s platform,” regardless of whether any users actually clicked on the ad. This is contrary to those who advertise on a CPC basis, who the case explains pay a fee each time a Facebook user clicks on their ad. Together, CPM- and CPC-based advertising make up the majority of Facebook’s sizeable ad revenue, the suit states.
As far as the actual exchange of money between advertisers and Facebook, the suit says the defendant will debit an advertiser’s account as their ads are published and/or clicked on. For CPC ads, Facebook debits money from an advertiser’s account depending on the number of internally reported clicks and at a predetermined per-click rate. What advertisers don’t know, according to the lawsuit, is that Facebook, in addition to charging for ad clicks by mobile app users, clicks on proposed class members’ ads itself—and charges for those clicks:
Through a practice of counting its own pre-fetch clicks as ‘clicks,’ Facebook has systematically inflated its charges for CPC Ads, and systematically inflated the data metrics it reports to Advertisers about how many times Facebook users have engaged their Ads.”
The mobile app allegedly sends coded requests to visit the Internet links embedded in proposed class members’ ads—what the lawsuit calls “pre-fetch” clicks or “stealth clicks.” According to the case, the coded requests “act as clicks” and are counted by Facebook as chargeable clicks “even though no mobile app user has engaged, initiated, or tactilely clicked the ad.” From the complaint:
Facebook registers a Stealth Click when Facebook’s software code in the Mobile App instructs it to perform HTTP GET requests—automatically, in the background, and invisibly—to hyperlinks embedded in posts viewed by the Mobile App user, including links contained with Ads.
An HTTP GET request is a hypertext transfer protocol (‘HTTP’) function that requests data from a specified resource, such as an Advertiser’s website hyperlinked within an Ad.
If a Mobile App user clicks a hyperlink within an Ad displayed on the user’s mobile device screen, the Mobile App will send an HTTP GET request to the hyperlinked resource and register a proper cost-per-click charge.”
Facebook’s alleged impropriety doesn’t end with the ads themselves, however. The case claims the data analytics—the number of clicks and engagements with CPC and CPM ads—the company provides advertisers are also artificially inflated, with the supposedly misrepresented results driving advertiser decision making and thus driving up Facebook’s ad revenue.
What does the plaintiff hope to get out of this?
In addition to monetary relief, the lawsuit asks the court to:
Stop Facebook from continuing its alleged “Stealth Click” data commingling and charging practice;
Mandate that Facebook provide complete accounting for its alleged Stealth Click charging practice; and
Require Facebook to properly disclose of its CPC and CPM practices in its terms of service and data analytics.
Who’s covered by this lawsuit?
The latest in a seeminglynever-endingstring of lawsuitsagainstthe social media platform, the 21-page case seeks to represent a class of advertisers—individuals and businesses alike—who bought a CPC or CPM ad from Facebook containing an ad link at any time. The lawsuit also looks to cover a proposed subclass of individuals and business who bought a CPC ad from Facebook and were charged for ad clicks autonomously generated by the company’s mobile app.