Here's a good article on the issues surrounding click fraud - the clicks you pay for at sites like Google, MSN and Yahoo and pages like this with the ads on the side of the page (or wherever).
This is a serious issue for businesses because it can drain a lot of revenue. I once put up and ad and wasn't watching it and the amount billed in two days was something like $600.00 for Christmas decorations. I cannot believe all that was legitimate, however Google claimed it was and I didn't have the proper logs to look into it. I never had such an issue so didn't bother in the past.
More recently I have found that in competitive spaces like the online travel industry, online advertising is a significant part of the cost of doing business. The ads are very expensive based on the amount of clicks received.
Even worse is the web development space where you have to spend $2.50 per click just to get on the board. Something is wrong with that picture - and I got no leads for a huge amount of expense which just doesn't seem right.
Of interest is that recently I got a letter in the mail about a class action law suit against Google to get money back for fraudulent clicks. Hmm. Some lawyer will make a lot of money. The more alarming thing to me was that this letter stated I either had to send in a letter to remove myself from the suit, otherwise I would be a part of this suit and could never again sue Google for this reason. Well if I send in a letter is Google going to see that and shut down my advertising so they won't get sued? And what if I join the suit but I don't have any click fraud that I know of. I don't get any money now but I may have a click fraud issue later? I would like to think that Google is angelic and all that but reality is...Enron happens. The nice thing for Google is they basically settle this suit, pay a bunch of money, and can never be sued again for all the people who didn't see the letter or respond to it. And for those that did they might just close those people's accounts. It's always the little guy getting burned no matter which way you look at it. I saw subsequent similar letters for other online advertising services.
Click fraud is a serious issue for businesses. Not only do you have to ensure you aren't paying for fraudulent clicks, however, you have to make sure your site is secure, because if you are pouring a lot of money into advertising and someone else can redirect your visitors to another site - you're paying for their advertising.