Fraud alert: mobile ads that are never actually seen by anyone

With fraud running rampant in the mobile-app advertising space, a new report reveals a troubling trend for unwary advertisers who buy ads for apps that never even get seen by users.

According to the ever-alert investigators at fraud watchdog company Forensiq, close to $1 billion a year worth of advertising may be going into the digital dumpster because thousands of mobile apps are secretly running spots that users don’t and can’t even see with their own eyes. Marketers lose customers and market share, app users burn through data because the bogus ads still burn up as much as two gigabytes per day on a single device.

By the way, here are some tips for advertisers on ways to avoid falling prey to these scams. And check here for more on which apps have been targeted.

Meanwhile, the scam goes on. As BusinessInsider points out, the fraud puts a sizable dent into a potentially huge ad market:

In the US alone, $20 billion is expected to be spent on mobile in-app advertising in 2015, according to eMarketer, which means the money lost to in-app fraud could pass the $1 billion mark by the end of the year.

For advertisers, the impact of mobile device hijacking is even more severe. Forensiq estimated the annual cost to advertisers — which are unwittingly paying for all these invisible ads to be served that are never actually seen by a real person — is at least $857 million. It can be difficult for advertisers to know their ads are running on malware because the apps also spoof user behaviour and send back legit-looking data.

Here’s how Forensiq broke the case, according to a post in BloombergBusiness: “Over the course of the 10-day study, one percent of all devices observed in the U.S. ran at least one app committing this kind of fraud; in Europe and Asia, two to three percent of devices encountered fake ads. Forensiq identified over 5,000 apps that display unseen ads on both Apple and Android devices.”

In a press release, Forensiq also shared some alarming predictions about the future state of mobile-ad fraud:

  • We project in-app fraud will surpass the $1 billion mark globally in 2015
  • Mobile advertisers are losing 13% of their ad spend to mobile device hijacking
  • 12 million mobile devices were flagged for fraudulent activity
  • 700 invisible ads loaded on a single hijacked device in an hour
  • Mobile device hijacking can cause a device to waste 2GB of data per day

This scam, of course, is just the latest in an endless string of dodgy behavior by digital bad guys. And, say experts, this one is relatively small-time, as Bloomberg points out in an interesting anecdote:

The main limiting factor for this particular flavor of ad fraud may be economic. The average ad rates for mobile ads on the apps in the Forensiq report hovered around $1 per thousand views. People intent on making a living through a scam on mobile devices probably have more lucrative options.

Lookout, a security firm focused on mobile threats, says that most of the growth in mobile malware in the U.S. is coming from so-called ransomware, where criminals commandeer a phone and then demand money to unlock it. “Why am I going to do ad monetization when I can have something pop up and say I’m not going to unlock your device unless you give me $200,” says Michael Bentley, Lookout’s head of research and response. “The payoff per phone is just so low.”

Nice. Although that will be of scant comfort to an advertiser who has written a $500,000 check for an ad campaign that nobody will actually see.

 

Photo: Thousands of mobile apps are reportedly running ads secretly. (Associated Press archives)

 

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  • Gen. Chang

    That kind of stupid comment by lookout,is one more reason I don’t use them. Neither the author or lookout seem to care about the users having their phone hijacked,data stolenn,and batteries drained,potentially causing damage to the battery AND phones! But by all means,sympathy for the advertisers seem more better,NOT….!!

 
 
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