Searchquant made a very vaild point and defined distribution fraud in the PPC industry. Apparently, the argument is that distribution fraud is even worse than click fraud, and we (PPC advertisers) should start calling it the proper term - ‘Distribution Fraud’, instead of ‘Search Arbitrage’. Here is the reason:

Paid search ads are bought by advertisers with the explicit understanding that those ads will only be viewed as a direct result of a search performed on a search engine. Contrary to this understanding, Distribution Fraudsters are taking search ad feeds (as distinct from contextual ad feeds) and showing them on domains whose sole purpose is to receive low-CPC clicks from Google AdWords and provide no option to the user but to click on a high-CPC *search ad* within the site; this constitutes a contextual ad, not a search ad.

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