Photo/IllutrationVice President Shoichi Nakamoto, second from left, and other executives of Dentsu Inc. offer their apologies for fraudulent business practices in a news conference in Tokyo on Sept. 23. (Ryota Goto)

Advertising giant Dentsu Inc. has admitted to overbilling clients and, in some cases, deliberately cheating them after an in-house investigation showed the practices continued for nearly four years at least.

The fraudulent activity was with regard to the way the company placed online business ads on behalf of clients.

Tokyo-based Dentsu has so far identified 633 cases of overcharging and cheating that totaled around 230 million yen ($2.3 million) and involved 111 advertisers, the company said Sept. 23.

The scandal came to light as a result of a complaint from Toyota Motor Corp. in July.

Dentsu said it is widening its investigation into the shenanigans and expects to announce its findings by the end of this year.

The scale of the fraudulent activity involving digital advertising services could be much worse than the company fears as it handles about 200,000 Internet advertisements on behalf of 1,810 clients.

The scandal centers on contracts with clients promoting their companies on websites and smartphone apps. Both the parent company and Dentsu subsidiaries were involved in the fraudulent practices in the period from November 2012 until this past August, according to data already confirmed.

The company uncovered 14 instances in which advertisers were overcharged by a total of 32 million yen even though the ads were not carried online as specified in the contracts with clients.

Another practice involved posting ads during periods that were different from those sought by advertisers.

The company also turned up instances of Dentsu employees and those of its subsidiaries submitting false reports to advertisers on showings, page views and other matters.

Some of the fraudulent activity was due to simple human error, Dentsu said. But in other cases, clients were deliberately cheated.

Dentsu helps advertisers by giving advice on suitable online sites, duration of showings and how to reach the proposed target audience, for which gender and age are big factors. Advertisers can judge whether a campaign is successful by checking page views.

Unlike advertisements for newspapers or television whose fees and other conditions are decided in advance, Dentsu secures space for Internet advertisements through a bidding process and decides on the fees paid by advertisers based on the numbers of showings, page views and other factors.

Posting ads online is more complicated than the work done for ads that run in newspapers and on television.

Dentsu partly blamed a lack of manpower in divisions in charge of Internet advertisements for the spread of the fraudulent practices.

“We should have come to grips with the situation by increasing the number of staff in those divisions," said Shoichi Nakamoto, a senior executive vice president of Dentsu. "We think that it is a problem of management rather than one of certain individuals.”

With regard to the 230 million yen, Dentsu said it plans to negotiate with advertisers to return the money.

According to Dentsu, Toyota, one of its major clients, tried to gauge the effectiveness of its online ads in July and found a number of discrepancies. It reported the matter to Dentsu.

Dentsu set up an in-house investigation team in mid-August. In early September, it revamped its businesses for management of Internet advertisements by transferring them to divisions that are almost autonomous from other divisions.

(This article was written by Shinya Wake and Fumiko Kuribayashi.)