LevelFields, a Virginia-based investment research platform, filed a lawsuit against Reddit because they claim that Reddit sold them pay-per-click ads but did not provide a way to verify that the clicks on these ads were made by real people, as opposed to bots or other non-human entities. LevelFields alleges that Reddit has broken their contract by failing to use reasonable means to ensure that the ads were clicked by actual people.

To verify that ad clicks are from real users, advertisers typically demand performance audits, and platforms often refund invalid clicks. Reddit addresses ad integrity by offering solutions such as Oracle Moat-verified viewability, audience verification through NCSolutions, and DoubleVerify for fraud. However, in the case of LevelFields, their request for IP address data to verify the ads they were billed for was not fulfilled by Reddit, leading to the lawsuit.

Click fraud is a type of ad fraud that occurs when a person or program clicks on an ad with no intention of engaging in business with the advertiser. This can be done by competitors to incur charges on a rival, or by publishers looking to increase their fees. It's a significant issue in the advertising industry, with an estimated 22 percent of ad spending last year lost to click fraud, amounting to $84 billion according to Juniper Research.

In its S-1 filing with the US Securities and Exchange Commission, Reddit acknowledged the risk of click fraud and stated that they invest in efforts to detect and prevent inauthentic content or invalid traffic. This includes investments in proprietary technologies to detect and address content and vote manipulation. Despite these efforts, the lawsuit by LevelFields suggests that Reddit may not be adequately preventing such abuses.