Microsoft is suing three people for running what the company claimed was a major click fraud racket on its online advertising platform.

The company alleges that defendants Gordon Lam, Melanie Suen and Eric Lam used fraudulent methods to generate clicks on ads in an attempt to create artificial traffic to competing sites.

The high traffic rates drove up advertising costs for competing businesses, and allowed the defendants' own links to receive a more favourable search ranking.

"By engaging in a widespread scheme that generated invalid clicks on links to online ads that were displayed in response to search requests on Microsoft's network, defendants disrupted the advertising campaigns of their competitors, and obtained increased user traffic for their own ads at a much lower cost than they could have otherwise," Microsoft said in the filing.

The suit also alleges that the click fraud operation netted the defendants more than $250,000 (£153,000). Microsoft is seeking an injunction preventing the defendants from further fraud on its networks, and $750,000 (£460,000) in damages.

Eradicating click fraud has become a major issue for search companies in recent years. Advertisers have raised concerns about the ability to police affiliates and prevent users from defrauding advertisers with inflated traffic numbers.

Google paid out $90m (£55m) in 2006 to settle a click fraud suit brought by an online retailer.