LinkedIn settles ad overcharging lawsuit for $6.6 million

Microsoft-owned LinkedIn has agreed to pay $6.625 million to resolve claims by advertisers that it overcharged them by presenting inflated user engagement metrics for video advertisements. As part of the settlement, LinkedIn is required to hire a reputable independent auditor to review its advertisement metrics, as detailed in the plaintiffs’ request for preliminary approval in the U.S. District Court for the Northern District of California.

LinkedIn has agreed to pay $6.6 million to settle claims that it juiced ad metrics to overcharge advertisers. pic.twitter.com/2rrFDhe0om

— Rob Freund (@RobertFreundLaw) July 26, 2024

The employment-focused social media platform has updated its agreements with advertisers according to the legal document.

The compensation will be distributed to advertisers who used LinkedIn’s advertising services from January 2015 through May 2023, which has roughly 300,000 members, as outlined in the settlement motion. The settlement still requires the approval of U.S. Magistrate Judge Susan van Keulen in San Jose.

While agreeing to the settlement, LinkedIn, based in Sunnyvale, California, has not admitted any wrongdoing and continues to deny any improper actions.

Why LinkedIn is facing a lawsuit over its ad policy

The lawsuit originated from allegations in November 2020 by companies including TopDevz of Sacramento and Noirefy of Chicago, claiming that LinkedIn exaggerated the number of video ad viewers to overcharge advertisers.

The allegations also claimed that LinkedIn inflated its metrics by counting views from videos that played in users’ LinkedIn apps but were off-screen due to users scrolling past them.

This legal action began shortly after LinkedIn acknowledged in November 2020 that its engineers had rectified software errors that might have led to over 418,000 instances of overcharging, most for amounts less than $25.

LinkedIn has suggested that it compensated nearly all affected advertisers.

In December 2021, Judge van Keulen dismissed the lawsuit with prejudice, stating the plaintiffs had not proven their legal remedies were insufficient before resorting to suing under two California statutes that only offer equitable remedies such as restitution.

At that time, she noted that LinkedIn was not implicitly required to provide “accurate ad metrics,” referencing its disclaimer that absolves it of responsibility for click fraud or unauthorized third-party activities that could inflate ad costs.

The advertisers appealed this decision, but the appeal was then paused as the parties entered settlement talks.

Amidst these legal proceedings, Microsoft reported a 17 per cent revenue increase for the quarter ending March 31, with overall revenue reaching $61.9 billion. LinkedIn itself reported a 10 per cent revenue boost during this period. The tech giant is set to release its most recent quarterly results on Tuesday (July 30).

Featured image: Canva / Ideogram