CBC news has a story about click fraud. Unfortunately they seem to suggest Google "loses" US$1 billion/year to click fraud. Google doesn't lose this money. Instances of ads with detected invalid clicks are similar to instances of ads they serve that have no clicks. Presumably Google makes money from undetected click fraud.
It says Google lost a law suit, paying $30 million (cash) and $60 million in ad credits.
It also outlines Google's fraud detection methods.
http://www.cbc.ca/news/story/2007/03/02/tech-googleclickfraud-20070302.html
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http://slashdot.org/article.pl?sid=07/09/18/225250
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