Brief:

• A scheme to defraud advertisers out of millions of dollars in media spending was uncovered by several ad-fraud detection companies, BuzzFeed News reported. The plot worked by mimicking online behaviors of real users with bots connected and run by people and shell companies in Israel, Serbia, Germany, Cyprus and Malta, among others.
• The fraudsters acquired legitimate apps through a company called We Purchase Apps and transferred them to shell companies. They then captured the usage data about real app users to create fictitious activity among a vast network of bots, and BuzzFeed estimated that the affected apps had been downloaded 115 million times.
• A person involved in the matter told BuzzFeed that the scheme likely stole hundreds of millions of dollars from brands whose ads were shown to bots instead of real people. More than a dozen of the apps target kids or teens, and a complete list can be seen on a spreadsheet BuzzFeed assembled.

Insight:

While mobile ad fraud is nothing new, BuzzFeed's deep reporting demonstrates the growing sophistication of bot networks that seek to defraud brands out of millions of dollars by impersonating real users. By acquiring legitimate apps that have been approved for download by trusted app stores, the alleged fraudsters avoided one way apps are policed. Acquiring the apps provides access to the user data of real people, which can then be emulated to generate fictitious activity that's more difficult for fraud-detection services to detect and stop.

Google removes apps that violate Play store policies and last year pulled more than 700,000 apps that were in violation. After being contacted by BuzzFeed, the search giant removed more than 30 apps from the Play store that were said to be possibly fraudulent and ended multiple publisher accounts with its ad networks. Google said it had previously had removed 10 apps in the scheme and blocked many of the websites as it continues to investigate others.

The statistics around ad fraud demonstrate that marketers must push the platforms they use to be increasingly vigilant. App metrics firm AppsFlyer estimated mobile ad fraud grew 30% to between $700 million and $800 million in Q1 2018 from a year earlier. Ad fraud-detection company Pixalate found that 23% of all ad impressions in mobile apps are fraudulent in some way. Juniper Research estimated digital ad fraud will cost north of $19 billion this year, but others said the figure could be three times that, according to BuzzFeed.