Google will pay $500 million in fines over AdWords sales that allowed U.S. residents to access ads for online Canadian pharmacies, the Department of Justice announced Wednesday.
Those ads led to sites selling prescription drugs from Canadian pharmacies, which were then illegally imported into the United States. The $500 million forfeiture, which the DOJ said is the largest ever in the U.S., is the gross revenue that Google received from Canadian pharmacy-related AdWords sales plus the gross revenue earned by Canadian pharmacies that sold drugs to U.S. consumers, the agency said.
"This settlement ensures that Google will reform its improper advertising practices with regard to these pharmacies while paying one of the largest financial forfeiture penalties in history," Deputy Attorney General James M. Cole said in a statement.
In addition to the $500 million, the deal includes several compliance and reporting measures with which Google must comply.
"We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago. However, it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place," Google said in a Wednesday statement.
Google declined to provide further comment on the matter "given the extensive coverage this settlement." It's not the first time the company has spoken out on the issue, however. In September 2010, it filed suit against advertisers it believed had broken its rules and advertised illegally via AdWords. At the time, Google said the problem was an "ongoing, escalating cat-and-mouse game" that has grown in sophistication over the years.
The DOJ investigation was spearheaded by the U.S. Attorney's Office in Rhode Island and the FDA/OCI Rhode Island Task Force. Officials first became aware of the issue thanks to a separate financial fraud investigation unrelated to Google. The agency apprehended a man who used AdWords to sell drugs online, and he provided them with details on how it was done. The DOJ even set up a few undercover Web sites for the purpose of selling drugs via AdWords.
Justice officials said Google "was on notice" as early as 2003 about the Canadian pharmacy sales. While the search giant took steps to ban other countries from selling drugs in the U.S., DOJ said Google "continued to allow Canadian pharmacy advertisers to target consumers in the United States," providing customer support to some of these companies from 2003 to 2009.
In 2009, however, Google was made aware of the Rhode Island investigation and took steps to stop its support of these companies. Google started requiring online pharmacy advertisers to be certified by the National Association of Boards of Pharmacy's Verified Internet Pharmacy Practices Sites program and hired an outside company to detect pharmacy advertisers exploiting flaws in the Google's screening systems, the DOJ said.
Importing prescription drugs into the U.S. from Canada and elsewhere is illegal because the Food and Drug Administration (FDA) cannot ensure their safety.