Exact url dynamic keyword insertion

[ClaytonKendall]

A competitor of ours is using dynamic keyword insertion for exact urls in our field. I'm not 100% clear on this, but isn't that not allowed in adwords? I am not one that usually turns in a competitor for shady doings, but I'm not sure what to do. Any advice?

[ezclickmedia]

I think you need to ask yourself this: If you were doing this type of "shady" PPC marketing like your competitor is, and they found out about it, do you think they would be so kind as to not turn you in?