I've never been one to "tell tales", but it pi55es me off when I see text like this on web sites: "Most of this website is free for you to use. We cover our costs by displaying these Google sponsored adverts. If you click on them we get paid an average of 10p per click. Please show your appreciation of us by clicking as many times as you can." Do you think that sites that do this should be reported, because they're clearly breaking the TOS about encouraging people to click ads, and the traffic that they provide is going to be of a low quality, or is t beeter to just let Google police themselves.
I would report it... just try to put yourself in the advertiser's shoes, you wouldn't want to lose your clicks and money that way it doesn't take long at all.
I guess I would make it on case by case basis, nice useful websites that doesn't look like MFA I would probably warn webmaster to remove it before someone does report him, if website looks like total MFA junk pretending to be honest website report him ASAP!
Yes, report it. It is no better than theft from the advertiser. There's also a lot of people who would love to get in to AdSense but can't for one reason or another - they'd love the opportunity that these sites are pissing away. Report it and have a clear conscience - it keeps the quality of AdSense high for everyone's benefit.
Pay for advertising, then you'll realize that it is worth reporting! I just actually "started" reporting all these crap sites that use hidden keywords and such... I just couldn't take it anymore knowing that my money was probably going down the drain by these websites as well!