The Wall Street Journal recently published an article that provides additional details of last year’s sting operation against Google AdWords. The federal investigation, which alleged that Google was aware of online pharmacies illegally selling drugs such as Steroids, HGH, Oxycontin, and Ritalin to individuals without prescriptions, used a convicted felon by the name of David Whitaker to build a strong case against Google.
The 37-year-old con man has a history of fraud and criminal activity that traces back to the age of 16. After he fraudulently sold millions of dollars of Apple iPods in 2005 with no intent to fulfill the orders, Whitaker used the money for private jets and to rent a mansion. Eventually, in order to avoid being arrested, he fled to Mexico and started an illegal pharmacy. Whitaker said the following regarding his interactions with Google:
“It was very obvious to Google that my website was not a licensed pharmacy. Understanding this, Google provided me with a very generous credit line and allowed me to set my target advertising directly to American consumers.”
After Whitaker was arrested in March of 2008 on charges of wire fraud, conspiracy, and commercial bribery, he agreed to work with agents on the sting operation. Whitaker, who used the pseudonym Jason Corriente during the investigation, used AdWords to promote an illegal drugstore (www.sportsdrugs.net). The website, which the U.S. government created to illegally sell steroids and HGH, was initially rejected by Google. However, once the undercover team began requiring customers to submit a form to purchase drugs illegally (instead of an obvious link), the website was approved. Next, shortly after the site after the initial website gained approval the agents added links that allowed customers to purchase the prescription drugs without submitting a form. In addition to the HGH and steroids, the agents created sites that sold narcotics, the RU-486 abortion pill, and other prescription only drugs. Although each of these sites sold prescription drugs illegally, Google AdWords approved the sites and generated leads for the illegal online pharmacies.
As a result of the sting operation, Google finally agreed to a $500 million settlement to avoid further prosecution for aiding in illegal online pharmaceutical sales. In the settlement, Google acknowledged that they should have not have allowed the online pharmacies to run certain advertisements:
“We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago. However, it’s obvious with hindsight that we shouldn’t have allowed these ads on Google in the first place.”
Although a $500 million settlement is small change for a company that has a $45 billion cash reserve, it introduces the idea that Google can be held responsible for advertisers’ actions. Kent Walker, Google’s general counsel, indicated that there are now strict policies in place to prevent criminals from placing ads:
“We ban not just ads but also advertisers who abuse our platform, and we work closely with law enforcement and other government authorities to take action against bad actors.”
Recently Google has had a slew of negative press. They have been force to apologize for agents that attempted to poach clients by falsely representing themselves, they face an expanded FTC investigation, they have been criticized for a growing lobbying budget, and have been subjected to negative publicity related to a new privacy policy. In addition to all of this, Google recently missed analysts’ predicted earnings and the stock has fallen drastically. Since the majority of recent news related to Google has been negative, this story was not what the company needed to boost its corporate image. . .
[Sources Include: Wall Street Journal & Search Engine Land; Image Credit: Wall Street Journal]
