What happens when you mix credit card fraud and click fraud? You get the perfect scam. It seems fraudsters have been hard at work at milking Google (NASDAQ GOOG) and other PPC networks such as Microsoft AdCenter (NASDAQ MSFT) and Yahoo (NASDAQ YHOO) out of valuable click traffic but what’s most shocking is that these networks don’t care.

The scam is pretty straight forward. Scammer A signs up for a legitimate Google Adsense account. Scammer A promotes a legitimate affiliate program, sometimes through a newly registered domain name to bypass concerns over the fraud itself. They then generate sales from the affiliate program, all this while using a stolen credit card. The transaction eventually gets charged back to Google or the network of Scammers A’s choice, but the affiliate network doesn’t know this and pays the scammer their commissions while having generated the extra sales. Confused? Don’t be. Just imagine spending thousands of dollars on Google’s PPC program to promote an affiliate program. Chances are, if carefully planned, you will get some results from the promotions and thereby commissions from the affiliate program. Now imagine all this while never paying a cent for the traffic.

How big is the problem? Well, since no one is talking about this, it’s hard to say. Some estimates suggest that the number of people running this scam could be as high as 10,000 people at any given time. A drop in the bucket for Google and other networks, most would assume. Combine this with the fact that this scam artificially creates a bidding system whereby bids have no real limit with the “fake” money in play, the legitimate advertisers end up footing the bill.

What is the perfect scam? Well, the networks win because while the immediate hit of the fraud itself is bad, that is more than offset when you consider the exorbitantly increased click prices. The fraudsters benefit because the affiliate network is none the wiser. The affiliate program wins because their sales are legit and the customer wins because they issue the chargeback. The only people who lose and doesn’t know a thing about it are the advertisers.

What is especially horrific is that networks like Google AdSense run such a closed loop system that the advertiser wouldn’t know the difference either. If you have ever advertised on Google AdSense, chances are you yourself have paid higher fees due to some fraudster bumping up those bids but unfortunately never knew it because Google doesn’t release that information publicly.

It’s the perfect scam, I have to hand it to the fraudsters. This one is going to be a tough nut to crack, as no one is talking about it and fewer people will want to fix it. I can only hope that people start questioning those $10.00 Google bids and start asking: “Hey, are those bids competing with me actually legitimate?”