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Why would google sooner disable a site showing ads and remove all revenue streams, than simply stop showing ads to "repeated" violators (based on IP, or whatever else they use to detect clickfraud) on that site, and only refund money made by THAT SECTOR the clicks came from?

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Presumably, Google assumes that the account owner is the person or entity committing the click fraud and will find ways to continue perpetrating the fraud if only an IP or range is blocked. It's probably much less of a headache to just nuke an account than play a game of cat and mouse with fraudsters.

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