Uber Goes on Rare Legal Offensive, Suing Ad Agency for Fraud
Uber Technologies Inc. is accustomed to getting sued. Now it’s doing the suing. And it’s partly thanks to Breitbart News.
The global ride-hailing company is taking advertising agency Fetch Media Ltd. to court for click fraud, alleging that the firm improperly billed Uber for “fake” online ads and took credit for app downloads it had nothing to do with. Fetch is owned by the world’s fourth-largest advertising company, Japan’s Dentsu Inc.
Uber filed the lawsuit Monday afternoon in U.S. District Court in San Francisco. The company said it discovered something was amiss when it canceled a campaign on the conservative website Breitbart, where Fetch was placing Uber ads. As part of the lawsuit, Uber plans to seek at least $40 million in damages, according to people familiar with the matter, who asked not to be identified disclosing legal plans.
“We are shocked by Uber’s allegations which are unsubstantiated, completely without merit, and purposefully inflammatory so as to draw attention away from Uber’s unprofessional behavior and failure to pay suppliers,” Fetch Chief Executive Officer James Connelly said in a statement Tuesday. “We vigorously deny the allegations from Uber and will be responding robustly to ensure we set the record straight.”
Going on the offensive in court is a rare move for Uber. The company is a plaintiff in only two federal cases, according to data compiled by Bloomberg. Meanwhile, it has been a named defendant in about 250 federal cases. The data aren’t comprehensive but show Uber is usually on the defensive.
Online advertising fraud has been a problem for the industry since the dawn of the internet. The practice has grown more sophisticated in recent years along with the amount spent on such ads. Fetch has acknowledged the challenge publicly and said it was working with research firm Forensiq to “fight against mobile ad fraud.”Digiday says:
“One of the biggest challenges we face as digital marketers is to reduce mobile ad fraud,” Fetch’s Connelly said a year ago.
Around the same time, Fetch’s global head of media, Steve Hobbs, told Adweek that a “significant amount” of downloads in Fetch’s system are flagged as suspicious. “Where there’s money, there is fraud,” he told the publication. “Being 100 percent on top of it is an impossibility, but we think with Forensiq’s help we can get it significantly lower.”
Uber learned of the alleged fraud when it was trying to avoid scandal of a different kind. The company had asked Fetch not to post advertisements on Breitbart News, a site run by President Trump’s former chief strategist, Steve Bannon. But it saw ads appearing there anyway....MORE
‘An industrial complex’: Why the Uber-Fetch lawsuit won’t change anything
The latest marketer-agency suit to rattle the industry will have many claiming the death knell for agencies.
On Monday night, The Wall Street Journal reported that Uber had filed a suit against Dentsu-owned mobile ad agency Fetch, alleging the agency had failed to return rebates to the brand and misrepresented how effective its media buys were. It also alleged that Fetch caused $50 million worth of damage to Uber by purchasing nonexistent and fraudulent ads for Uber without telling the company.
But unfortunately — or fortunately, depending on where you sit — agencies won’t be so quick to get killed off. After all, a $48 billion business is hard to kill. And as everyone from Publicis Groupe’s Rishad Tobaccowala to Pivotal analyst Brian Wieser has said, agencies are like cockroaches — they end up surviving.
“Advertising is an industrial complex,” said Engine chief experience officer and Deep Focus founder Ian Schafer. “There are as many forces propping it up as trying to disrupt it.”
In a statement, Fetch CEO and co-founder James Connelly not only said Fetch had not engaged in anything Uber was accusing it of, but that Uber itself was unprofessional: Fetch claims Uber stopped paying invoices for services provided by 50 vendors Fetch had worked with to place its advertising — and that Uber claimed ad fraud as a reason to not pay invoices.
“Any negativity around the industry doesn’t help. There may be short-term fallout, with some clients questioning whether they should take their mobile budgets in-house,” said Ollie Bishop, CEO at Roast. But in the longer term, this may encourage transparency between clients and agencies, he said....MORE
