Matt Parrella, chief of the San Jose branch of the U.S. Attorney's Office in Northern California, said that case was "not unique." The problem "is certainly not shrinking, and we're ready to prosecute people," said Parrella, whose office handled the Google case.

Click fraud is perpetrated in both automated and human ways. The most common method is the use of online robots, or " bots ," programmed to click on advertisers' links that are displayed on Web sites or listed in search queries. A growing alternative employs low-cost workers who are hired in China, India and other countries to click on text links and other ads. A third form of fraud takes place when employees of companies click on rivals' ads to deplete their marketing budgets and skew search results.

Although the extent of click fraud is impossible to measure with any certainty, its persistence has exposed a fundamental weakness in the promising business of Internet search marketing . Google's pending initial public offering has been widely anticipated as a barometer of online advertising and the post-apocalyptic dot-com climate in general.

"It's hard to tell how big the problem is, but people are looking at it closer and closer as the cost of search advertising goes up," said John Squire, vice president of business development of Coremetrics , a Web analytics firm. "Click fraud is a fin sticking out of the water: You're not sure if it's a great white shark or a dolphin."

Unlike advertising in traditional media such as billboards and print publications, "cost per click" Internet ads displayed with specific keyword searches have been promoted as a definitive way for companies to gauge their exposure to potential customers. As a result, U.S. sales from advertiser-paid search results are expected to grow 25 percent this year to $3.2 billion, up from $2.5 billion in 2003, according to research firm eMarketer. From 2002 to 2003, the market rose by 175 percent.

As more advertisers have competed for desirable keywords in their industries, the cost for clicks has risen too. On average, advertisers are paying 45 cents per click this year, according to financial analysts, up from 40 cents in 2003 and 30 cents in the second quarter of 2002. In certain sectors, such as travel, legal advice and gaming, the cost can reach several dollars per click.

But marketing executives say click fraud is pervasive among affiliates of search leaders Google, Yahoo-owned Overture Services and FindWhat.com. In a typical affiliation, any Web publisher can become a partner of these large networks by displaying their paid links on a Web page or within its own search results and then share in the profits with every click.

"There's a fatal flaw in the cost-per-click model because a ton of marketing dollars can be depleted in a fraction of a second," said Jessie Stricchiola, president of Alchemist Media , a search-engine marketing firm based in Los Angeles that specializes in fraud protection. "Technology is continuing to be developed that can exploit this pricing model at incredibly high volumes."

In recent documents filed with the Securities and Exchange Commission, the company also acknowledged the problem as a threat to its revenue, of which 95 percent is derived from advertising. Google and other search networks provide refunds to advertisers when click fraud has been discovered.

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