Mobile Ad Fraud Could Cost U.S. Advertisers $857 Million Yearly

In-app fraud could surpass $1 billion globally in 2015, a new study finds.

Mobile ad fraud is keeping pace with the ever-expanding mobile market, says digital ad fraud detection firm Forensiq. The company's study details the nature and scope of ad fraud in mobile, including a new type of mobile in-app fraud called “mobile device hijacking.”

More than 13% of the 16.2 billion daily mobile in-app impressions Forensiq observed were flagged as high-risk. The company estimates the annual cost of fraud to advertisers is more than $857 million.

When a user downloads and installs a fraudulent app, the app begins to call a lot of ads. Such apps can continue to run even when closed or minimized, run on the background when the device is booted up, and can serve ads at a rate of up to 20 per minute.

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Legitimate apps refresh ads every 30 to 120 seconds. The fraudulent app may ask for odd permissions that have nothing to do with its actual function. If the unwitting user agrees, the malicious software in the app is given space to work.

All this background activity can wear down a user’s battery quickly and use up to 2GB of data per day for a single app. Only about 10%-20% of the ads served end up being viewable to the user — and that’s if they have the app open.

The big difference between malware on mobile and on desktop is the intention behind it. A desktop user could unintentionally download something onto his or her computer and be none the wiser. Mobile users generally know and approve of an app download.

Most of the fraudulent apps aren’t household names or even all that popular. “It’s not Candy Crush,” says Mike Andrews, chief scientist for Forensiq. “But I don’t think it takes a major install base to get someone to install something once, use it once, and then have it run in the background.”

But it’s not like the apps don’t work either. “These are some good apps for consumers,” says Andrews, “in the sense that people like to play games or monitor their battery or practice making sushi. … So these apps look all right on the surface.” Still, Forensiq knew there was something wrong and had them flagged for fraud.

During a 10-day period, Forensiq’s team identified about 12 million unique devices with installed apps flagged for ad fraud. The company identified over 5,000 fraudulent apps for the study.

According to a video created by the team to visualize how the apps were working, advertisers like Nike and Unilever, as well as many others were being defrauded.

iOS users were found to have far fewer flagged apps on their platforms than Android users, which Andrews says is probably due to the stringent policies put in place by Apple for app developers.

David Sendroff, founder/CEO of Forensiq, hopes the study will "open a discussion and bring all stakeholders together around the issue.”

3 comments about "Mobile Ad Fraud Could Cost U.S. Advertisers $857 Million Yearly".
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  1. Craig Mcdaniel from Sweepstakes Today LLC, July 23, 2015 at 6:01 p.m.

    Our website has been on the net since 2003 now. There is a factor that is not a part of this discussion. This is free email service.  In the beginning I was for our members to use free email, now I am against it.  We had over 500 hacking attempts in the past year. These are mainly the JV teamers hitting on us.  EVERY SINGLE EMAIL ADDRESS used by these hackers used free email.  The problem with free email extends well beyond the hackers to people who want to keep their private identities secret. So these people use free emails as well.




    The point is, the problems with fraud can be broken down to a series of underlying issues that need to be address.  Free email is a part of this but there are many other side issues that need to be put on the table.



  2. Mani Gandham from Instinctive, July 28, 2015 at 2:36 a.m.

    Great, let's do something about it then. We dont need more "discussion", it's clealy fraud and should be stopped.

    Both Apple and Google need to improve their ad scanning efforts, meanwhile these existing apps should be completely removed from the app store, their creators banned and then fined and prosecuted for criminal charges. All of their info should be on file already to facilitate this process.

    The longer the industry decides to just sit around and do another study or press release instead of actually changing things, the longer fraud will continue to get worse.


  3. Ed Papazian from Media Dynamics, July 28, 2015 at 7:50 a.m.

    I assume that digital ad sellers are not rushing to fix the fraud problem because they have been charging advertisers for phantom  "impressions" all along and were they to stop doing that, their ad revenues would decline rather sharply. Eventually, one has to face reality and adjust ad rates/CPMs in line with truly "viewable" ad impressions. I agree, Mani, now seems like a better time to do this than later.

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