The Dirty Little Secret Keeping Ad Fraud off the Radar

Just a few years ago, the ad industry was up in arms over the staggering amount of digital ad fraud and what it was costing businesses. Increasingly sophisticated fraud detection technology was looked to as the solution. Surely by now, we know that our digital ad spend is going toward legitimate views, yes?

Well, this just in; news about a massive fraud operation that exploited apps on Android phones managed to steal millions in ad dollars before it was shut down.

“The fraud operation exposed by BuzzFeed News last week involved more than 125 Android apps and websites that tracked real human users and used this data to program bots to mimic their behavior as a way to evade fraud detection systems,” writes Craig Silverman in BuzzFeed News. “These bots opened apps and loaded web pages in order to generate fake ad views, and therefore revenue for the fraudsters. The affected apps and websites were distributed among a web of shell and front companies to hide their true owners and obscure the scale of the operation.”

Two things stand out about this operation – the sophistication of the fraudsters, and the scope of the network that ran the frauds.

“One way the fraudsters find apps for their scheme is to acquire legitimate apps through We Purchase Apps and transfer them to shell companies,” Silverman wrote in a previous article that exposed the scheme. “They then capture the behavior of the app’s human users and program a vast network of bots to mimic it, according to analysis from Protected Media, a cybersecurity and fraud detection firm that analyzed the apps and websites at BuzzFeed News’ request.

“This means a significant portion of the millions of Android phone owners who downloaded these apps were secretly tracked as they scrolled and clicked inside the application,” Silverman continues. “By copying actual user behavior in the apps, the fraudsters were able to generate fake traffic that bypassed major fraud detection systems.”

For its unwitting role in the debacle, Google acknowledges that as much as $10 million may have been stolen through the network – but sources seem to think that number is actually much, MUCH higher.

“This summer, an anonymous source using an email address from one of the companies active in the fraud scheme said the total amount stolen was likely hundreds of millions of dollars,” Silverman writes. “Separately, Pixalate, a fraud detection company that first revealed one aspect of the scheme, estimated that one app in the scheme could steal $75 million per year.”

For brands caught up in the mess, it’s on them to push for refunds of suspect traffic – and most of them probably won’t, maybe just chalking up the loss to the cost of doing business online.

“I’d be willing to bet 90% of the impacted brands won’t take any real action other than sending an angry email to their agency, and then with very little follow-up,” said Mike Zaneis, CEO of the industry watchdog Trustworthy Accountability Group.

There’s a dirty little secret about complicity here that keeps a lot of this out of the press and under the radar, according to David Carroll, an associate profession of media design at the New School’s Parsons School of Design. He told Silverman that the lack of public disclosure in intentional, “to stave off law enforcement and lawmakers.”

And we’re talking international law enforcement, which makes policing, reporting and prosecuting a Herculean task – and the fraudsters know this, intentionally setting up shell companies in countries all over the map, from Bulgaria, Russia, BVIs, Malta and others.

So the industry does what it can – while realizing that there is little they can do to protect the budgets of brands that advertise on digital platforms.

To quote Google’s post on the exposed scam, “Fighting invalid traffic is essential for the long-term sustainability of the digital advertising ecosystem.”

Maybe that’s the point – maybe it’s not the invalid traffic we should be questioning, but the long-term sustainability of the ecosystem itself. It’s collapsing under its own weight, as digital ad values collapse, consumer confidence erodes, and brands rethink taking part in an industry that stubbornly refuses to grow up.