What is click fraud?
Click fraud is deliberately generating clicks on pay-per-click ads with no real interest behind them, in order to earn money from the clicks or to waste a competitor's budget. It is done with bots, networks of infected devices, paid human clickers or a publisher clicking its own ads. Advertisers pay for it unless it is detected and refunded.
In a search feed, every monetised click pays the publisher, which creates the incentive. A dishonest publisher can use bot traffic from a botnet, hire a click farm, or engage in Self-clicking. A dishonest traffic seller can do the same to an honest publisher by selling fake visitors that click.
Click fraud is a subset of invalid clicks: all fraudulent clicks are invalid, but not all invalid clicks are fraud. Search engines filter in real time and afterwards, and advertisers add their own protection. ClearTrust's ClickTrust is one such product for performance advertisers. Courts have treated large schemes as criminal fraud, so this is not merely a terms-of-service issue.