click fraud is only a problem if they can't measure it. since advertisers can track conversions, they can account for click fraud and adjust their keyword bids appropriately. therefore we should discourage click fraud as it will only hurt the legitimate sites' cpc.
I'm pretty sure there are some advertisers out there waiting to get revenge on someone outbidding them for keywords. For example: I outbid someone for an eBay add for PS2 games last week and had a few clicks a day (around fifteen) for a couple days. Then next two days it jumped to about sixty a day. Havn't seen a single cent from it. I'm prettys sure it was someone clicking away on my adds to get there's up. Congratulations, you succeded!
Google has enough click-patterns at hand to find out if it is a fraud or not. (All this quick black-mailings will not solve any problems - if any)
Google at the moment has nothing to lose from click fraud - in fact it's gaining. Every fraudulent click drops another few pennies into Google's piggybank. Only the advertisers lose out. As the article pointed out, the fraudsters are competitors who use Google AdWords themselves so Google would lose out if they were forced to cancel their accounts. Their coversion tracking is the most helpful system at the moment because 1. Advertisers can see themselves when possible click fraud is taking place and adjust their keywords accordingly. 2. Advertisers will gradually move away from the high-competition words, towards more focused keywords. This will be better for the regular searcher who is more likely to see a useful ad by the side of his page. And will eventually be better for Google, as the click through rate will improve as a result of the improved targeting.
Google does lose to click fraud: Advertisers who don't see bang for their buck will either reduce their bids or cut back entirely. Also advertisers who figure out they are victims of fraud will complain to Google or possibly even sue them (assuming Google was obviously negligent, which I doubt they ever are). It really isn't hard for anyone to track the source of clicks themselves - the information is right in your web logs so even if you can't analyze it as it happens you certainly can after the fact from your logs. I can't imagine why anyone would pay for a service like "Who's Clicking Who?" but people pay for the darndest things.. Ask yourself this: if Google bothers to check that YOU aren't scamming your adsense account, why on earth wouldn't you expect them to check if someone else is? It's the same thing to Google: their advertiser is being defrauded, whether by you or anyone else. They are not going to ignore that.
I would be fascinated to know how it "contacts" this click-fraudsters telling them they know who they are... I guess it is just displaying the info instead of an ad. At first I got the impression it was identifying them and sending them a letter, but that must not be it.
It's a piece of Javascript, so it could either popup a message or redirect them to some other page. It works either by logging their ip address and looking to see if it's seen them before or (less reliably but easier) by logging a cookie to the browser's machine. As I said before, all this is in your web logs anyway, so why would you pay for such a service?
Google doesnt charge them for fraudelent clicks... we all very well know this by all the ive been banned threads started... that guy is just promoting his new anti click fraud tool.
Most people don't want to parse their way through log files. Many webmasters don't know what a command line is or how to spell Torvalds. I use an ad tracking package that can easily show me number of clicks per IP and I can drill down to see the clicks including time, ad clicked on, and whatever else was available to JavaScript. But back to the question of how fraudsters are notified; their Adsense accounts get suspended or banned for life. Search this forum for "no apparent reason" or "my mom" and you'll find a boatload of fraudsters banned by Adsense.
The bottom line is what counts. If I pay more for PPC than my revenue per customer, then I stop doing it. It is basic truth that if people are willing to pay me just for clicking around, and have programs to help me do it, there is plenty of fraud in the system. Like the stock market, there seem to be plenty of suckers to bid up the price of PPC.
Most web hosting plans give you gui tools to see your logs with - no danger of having a heart attack from that dangerous command line stuff There are also many log file parsers and analyzers, free and otherwise.