As mobile ad fraud becomes more sophisticated, it becomes more difficult to catch using traditional methods. Stevie-winner Scalarr, Inc. is a mobile fraud detection company that uses machine learning to identify and prevent fraud.

Online fraud is almost as old as the internet itself, and as this technology progressed, fraud evolved and kept pace. In mobile ad fraud, fraudsters abuse mobile advertising technology to swindle online publishers, advertisers, and supply partners.

According to The Economic Cost of Bad Actors on the Internet, Ad Fraud 2019, by Cheq, a cybersecurity company based in New York, United States, direct and indirect economic and social costs of global ad fraud could amount up to $30 billion in 2019. 

“I have studied the economic costs of fraud in many sectors for decades, and I was left stunned by the scale of fraud in online advertising,” economist Roberto Cavazos said in the report.

Cavazos is a professor at the University of Baltimore in Baltimore, Maryland, United States, and he worked on the report with Cheq.

AppFlyer, a mobile app analytics firm headquartered in San Francisco, California, United States, monitored 2.5 billion installs across 9,500 mobile apps in the first six months of 2019 and extrapolated their results to a global scale. They revealed a whopping 22.6 percent of nonorganic app installs globally could be classified as fraudulent. They published this and other findings in a report titled State of Mobile Fraud, 2019.

The Different Faces of Mobile Ad Fraud

Fraudsters attempting to steal advertising budgets are an ingenious lot. According to Stevie-winner Scalarr, a mobile ad fraud detection company based in Wilmington, Delaware, United States, new and increasingly sophisticated frauds emerge every day. These include smart bots, intelligent device farms, and mixed fraud. 

“Fraudsters have become so smart that you can’t catch them by traditional methods anymore,” says Olga Bazarova, marketing lead at Scalarr.

The AppFlyer report reiterates this sentiment. It reveals that fraudsters are reacting to protection measures at an unprecedented pace. In 2018, it took them a month or two to react; now they do so in a couple of days. 

The upshot of many of these reports is that mobile fraud is ubiquitous, and no platform or publisher is safe.

“Mobile marketers tend to believe that ‘trusted’ traffic sources, such as Facebook, Google, and ad video networks, are a panacea against fraud, and they redistribute marketing budgets there. In 2019, though, we saw a lot of examples of fraud on trusted sources, confirming that fraudsters always follow the money,” said Bazarova.

Mobile ad fraud targets all stages of online advertising, from impressions to clicks to app installs. It even targets in-app purchases. The Financial Times, a daily newspaper headquartered in London, England, United Kingdom, was shocked by the scale of domain spoofing against its site. In domain spoofing, fraudsters eat into advertising budgets by masquerading as a popular domain that can display ads.

“The scale of the fraud we found is jaw-dropping,” says Anthony Hitchings, the digital advertising operations director at the Financial Times. “The industry continues to waste marketing budgets on what is essentially organized crime.”

AI to the Rescue

The speed and scale at which mobile ad fraud has evolved indicates it’s not something mobile developers or marketers can tackle alone. Detecting fraudulent installs is a mammoth task requiring analysis of numerous parameters and correlations.

Mobile ad fraud intelligence and protection solutions are increasingly and successfully relying on machine learning (ML) and big data to identify and to prevent fraud. Scalarr, AppFlyer, Cheq, and several other companies offering fraud detection and protection use ML algorithms to counter the attacks and to ensure marketers acquire only real users.

While the assumption is that fraudsters can’t work around these AI-backed countermeasures, only time will tell how this plays out. 

Scalarr Inc. recently won a Silver Stevie® Award in the Tech Startup of the Year - Services category and a Bronze Stevie® in the Startup of the Year - Business Services Industries category at The 2019 International Business Awards®.

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