GOOGLE, the dominant internet search engine, offered yesterday to pay up to $90 million (£52 million) to end a dispute with advertisers who have accused it of overcharging because of “click fraud”.

The proposed settlement is designed to end an escalating dispute that has led some experts to wonder whether as much as 30 per cent of Google’s advertising income — $6.1 billion last year — was obtained improperly.

It comes after a lawsuit filed in Arkansas by a group of advertisers led by Lane’s Gifts and Collectibles, a doll and teddy bear mail-order specialist, that alleged that Google’s pay-per-click advertising system was being abused by third parties.

Click fraud involves a third party, possibly an individual but more likely a internet robot, repeatedly clicking on an advertising link on the Google website. The advertiser allegedly pays far more to Google than it expects and generates only a handful of leads.

Nicola Wong, a Google lawyer, said that the company was offering up to $90 million, before legal fees, to any US advertiser that said that it had suffered from click fraud at any time from 2002. She said: “Most invalid clicks are caught by our automatic filters and discarded before they reach an advertiser’s bill.”

This is the latest blow for Google. Last month its shares plunged 14 per cent after a top executive acknowledged that its explosive growth rate would slow, and its decision to censor its Chinese version has been widely criticised.

The company is not offering cash; rather, it is willing to provide free advertising to any company that believes that it has suffered at any time during the pay-per-click scheme.

It is not clear whether British advertisers will be able to claim any of the credit on offer. Google says that it has yet to be sued by anybody outside the US over alleged click fraud. Eric Goldman, of the Marquette University Law School, in Milwaukee, Wisconsin, wrote on his blog: “This sounds like an outstanding outcome for Google . . . Given that the click fraud has been estimated in the billions, a $90 million settlement sounds like an excellent deal.”

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