Reddit is facing a lawsuit from an advertiser, LevelFields, a Virginia-based investment research platform. The company alleges that Reddit sold ads but did not provide a way to verify that real people were responsible for clicking on them. LevelFields booked pay-per-click ads on Reddit starting September 2022 and claims that Reddit failed to ensure that the ads were delivered to and clicked on by actual people rather than bots.
The complaint highlights the issue of click fraud, where a person or program clicks on an ad with no intention of doing business with the advertiser. This type of ad fraud has been a persistent problem in the industry. Reddit, in its S-1 filing with the US Securities and Exchange Commission, addressed ad integrity concerns and mentioned efforts to detect and prevent inauthentic content or invalid traffic.
LevelFields argues that Reddit, being in a good position to track click fraud as it serves ads on its own site, has failed to meet minimal standards for security and click monitoring. The company's request for IP address data to verify the ads it was billed for was not fulfilled by Reddit. The investment firm is seeking to have their claim certified as a class action. According to Juniper Research, 22 percent of ad spending last year was lost to click fraud, amounting to $84 billion. Reddit has not yet responded to the allegations.
