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Uber sues UK agency Fetch for alleged online advert fraud; Fetch says invoices went unpaid for months

Uber is suing U.K. mobile advertising specialist Fetch for ad fraud, with the ride-hailing company said to be seeking $40 million in damages.

In a lawsuit reported by Bloomberg, Uber is said to allege that Dentsu-owned Fetch billed it for fake clicks on its online ads, in a filing at the U.S. District Court in San Francisco Monday. Fetch denies all allegations.

Uber is said to have noticed a problem when it canceled a campaign set to appear on the Breitbart News website, where ads were placed by Fetch, but they continued to appear on the site.

"With Fetch, we learned the age-old lesson 'buyer beware' the hard way. Fetch was running a wild west of online advertising fraud, allowing Uber ads on websites we wanted nothing to do with, and fraudulently claiming credit for app downloads that happened without a customer ever clicking on an ad," an Uber spokesperson said in a statement emailed to CNBC.

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But Fetch Chief Executive James Connelly has responded by saying that the move is an attempt to deflect attention away from months of unpaid invoices.

"We are shocked by Uber's allegations which are unsubstantiated, completely without merit, and purposefully inflammatory so as to draw attention away from Uber's unprofessional behavior and failure to pay suppliers," said Connelly in a statement emailed to CNBC.

Connelly claimed that the company terminated its two-year agreement with Uber in May 2017 due to non-payment of invoices and since then Uber has been "taking drastic actions" to avoid paying. He added that Fetch helped Uber acquire more than 37 million new users since 2014, that it advised the company on reducing ad fraud and that Fetch scored 9 out of 9 in its annual appraisal by Uber in December 2016.

"Fetch takes ad fraud extremely seriously and has been working with clients and suppliers to minimize its impact within ad networks. It is unfortunate that Uber would misconstrue facts and use an industry-wide issue as a means of avoiding its contractual obligations," Connelly added.

Ad fraud, where bots rather than humans view or click on ads, is set to cost businesses $16.4 billion this year according to a report by ad verification company Adloox.

Uber's statement said it wished to highlight the problem of fake clicks. "While we believe litigation should always be a last resort, we hope this action will help bring more attention to the problem of online ad fraud."

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