Uber is suing an ad agency for click fraud in a case that could have big implications for digital media

Dara khosrowshahiYouTube/CNBCUber CEO Dara Khosrowshahi

Uber filed a click-fraud lawsuit Monday that could have big implications for the world of digital advertising.

The app-based taxi company is suing Fetch Media over allegations that the advertising agency billed Uber for fraudulent ads. Uber is seeking at least $US40 million in damages, according to Bloomberg, which first reported the lawsuit.

Fetch ran Uber ads on websites with which the taxi service didn’t want to be associated, Uber said in a statement. And Fetch claimed credit for app downloads even when customers didn’t click on an ad first, Uber said.

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

Fetch’s primary responsibility was to buy ad placements for Uber and monitor how well the spots did. But in its lawsuit, filed in the US District Court in San Francisco, Uber alleges that Fetch spent tens of millions of dollars on non-viewable and fraudulent advertising, particularly ones targeted at mobile devices. According to the lawsuit, Fetch was supposed to be compensated only when ads led to Uber app downloads.

Uber discovered the alleged click fraud when it tried to stop having its ads run on the far-right news site Breitbart, said a source at Uber familiar with the allegations. Even though Uber significantly cut back on the ads it was running overall, the number app downloads Fetch reported didn’t seem to change, the source said.

Fetch did not respond to a request for comment.

Uber was one of the hundreds of companies that blacklisted Breitbart after the 2016 presidential election and tried to prevent their ads from running on the site, which has promoted white nationalist views.

But this past spring, BMW, Nordstrom and other big advertisers that had blacklisted Breitbart found ads for their brands running alongside the site’s incendiary political coverage. That juxtaposition brought negative attention to the companies.

While large companies like Uber often work with ad agencies to buy media placements, a lot of the work is automated. This means that rather than ad agencies buying specific ad placements at set rates — think $US10,000 for a half-page newspaper ad — they buy open ad slots on websites automatically in real-time auctions.

If Uber succeeds in its lawsuit, other companies, including Nordstrom and BMW, may see an opening to challenge media buyers over ads unwittingly run on Breitbart and may prompt advertisers to look more closely at the data being reported to them by advertising agencies and publishers.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.