ronconway.bmpRon Conway, a well-known Internet investor, and entrepreneur Jim Pitkow have co-founded a company to stop advertising fraud online. They’ve invested an undisclosed amount of millions, alongside other angel investors.

The secretive Palo Alto, Calif. company, Fraudwall, also appointed former eBay executive Ken Miller as chief executive, the company told VentureBeat last week. Miller, 34, was the first employee at PayPal hired to tackle fraud. He joined in 2000, as PayPal employee number 22, and became vice president of risk management.

fraudwall.bmpThe company is saying little about its exact approach, other than to say it is focused on stopping click-fraud, which is when Web site publishers or others click on an advertiser’s ads to force the advertiser to pay more. The problem has caused distrust among some advertisers, and lawsuits filed by advertisers against both Google and Yahoo. Yahoo and Google have chosen to settle such suits, and maintain they’ve got click-fraud largely under control. Google reportedly now maintains fraud makes up less than 2 percent of clicks. (Update: Turns out, the report is untrue; see Google’s response here, which says Google does not know what the percentage of clicks are fraudulent). Though some people contest that, saying Google has a bigger problem than it admits to. Miller says Fraudwall will partner with advertisers, ad networks and search engines to track clicks. The team is already in the “double digits” of employees, and hiring mathematicians and people with roots in online payments fraud.

We think the company may be raising another round of capital, but is not certain.

Both Conway, who invested in search engine Google, and Pitkow, an entrepreneur active in the search industry, have close personal ties to Google, which is one of the leading targets for click-fraud — Pitkow was chief executive of Moreover Technologies, sold to VeriSign in October of 2005. Before Moreover, was chairman of Outride, which was sold to Google. Miller told VentureBeat that Conway is taking an active role in the company, leading its business development — the first time Conway has taken a hands-on role since SnoCap. The two came up with the idea for Fraudwall two years ago.

It joins a field of several players, including the young Clickfacts and the more mature OptimalIQ. (See our piece here.)

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