Although I think Google really tries to follow the “don’t be evil” mantra I think it now rings fairly hollow (ha – especially if it’s ringing up a ringtone ad scam at Google Adwords).

The problems are click fraud and downright illegal advertising which is running rampant all over the internet. This is a great set of PPC fraud advertising examples displayed at Google from a Harvard Law researcher, a proverbial drop in the online bucket of fraud.

Google, as the 800 pound gorilla, is the major beneficiary but this is an area that is simply ripe for legislation to prevent the plethora of PPC fraud schemes, ringtone scams, false advertising, and many, many more from polluting the online advertising space.

Why is this such fertile ground? It’s the new and fascinating combination of young users, young advertisers, young and old scammers, anonymity, global reach, and more that make this a complex and growing problem. Google et al are taking a “let the buyer beware” approach which is both evil and ignores the fact that many of the buyers are kids who wouldn’t know a scam from a treasure trove.

Ironically the solution to the scam ads is very simple. One new Law: If you run an advertisement you are responsible for any refunds in the event of a dispute with the advertiser. Make the publisher deal with their friend the advertiser who they are implicitly endorsing by showing the ad. This would clean it up very fast.

PPC fraud solution is not as easy, though I’d consider this:

1) Have teams of objective ombudsman researchers evaluate the fraud component at the different search engines.

2) Engines must refund to each account this average fraud component.

This incentifies the SE’s finding out and killing off the fraudulent clicks quickly, rather than the current lackluster efforts to root out the problems.