Fraud in online advertising: how to identify scammers and secure your marketing budget

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Fraud in online advertising: how to identify scammers and secure your marketing budget

With millions of businesses doing exactly the same as what you are doing, the only way to be noticed and gain business leads is to advertise online. Unfortunately, there is a ton of fraud in online advertising — from PPC click farms and bots to fake crypto trading storefronts. 

As an enterprise-grade antifraud system popular in the USA, the UK, and Europe, Covery has a fair share of experience with various types of scams and online fraud. This article is devoted to depicting various threats to your marketing budget, and how using an anti-fraud tool like Covery can help you prevent these dangers.

What is fraud in digital advertising?

Fraud in online advertising is any action or scheme that leads to deceiving a customer into wasting their marketing budget and paying for “visitor” actions that result in 0 financial gain. This also involves fraudulent ads that enthrall users into transferring their money into credibly-looking accounts (more on that later).

For now, let’s take a look at the biggest online fraud and scam threats of PPC, CPA, affiliate marketing, and other digital advertising methods.

What are the most common types of online fraud?

If we talk about PPC, CPA, affiliate marketing, etc., the most widespread online fraud types are the following:

  • Scam bots. While generating about 40% of all web traffic, bots are useful for the most part. They work on indexing the web data, optimizing search results, etc. However, bad bots are created to emulate human activity. They can initiate immense volumes of clicks, draining your PPC marketing budgets rapidly. In addition, this activity results in increased cost of marketing campaigns, 
  • Click farms. In poor countries like India, the Philippines, or China, people are paid to manually click on all banners daily. Such click farms drain ad campaign budgets quickly but result in no profit for a business.
  • Datacenter proxies. Scammers use data centers with their flexible infrastructure, vast resources and in-depth anonymity. This allows them to generate huge volumes of pseudo-mobile and web traffic to deceive companies interested in online advertising.
  • Click spamming. When a real user initiates a session on a real web page or in an app, a scam script operating there can click on invisible ads in the background, or perform fake clicks on banners to fool vendors into issuing payouts for such clicks.
  • Geomasking. By substituting IPs from real geolocations with those from the US or the EU, scammers deceive businesses into paying for assumedly high-value traffic, which actually is trash.

These are just the tip of the iceberg as there are many more online fraud techniques involving various methods of click scams. We will tell you how to deal with this later, but let’s take a look at the ad fraud domain first.

What is an example of ad fraud?

Eurostat provided a categorization of the most widespread ad fraud sources:

  • False financial institutions registered in Cyprus (37%)
  • Offshore companies (37%)
  • Fake entities, unregistered payment intermediaries, etc. (17%)
  • Malaysian fake companies (4%)
  • Other (5%).

All of these are threat actors of varying levels that insert themselves into your customer interactions through online advertising in order to lure your customers into fake investment schemes. 

Cryptocurrencies are among the most popular attack vectors, as people trust public figures that endorse various crypto activities. The infamous Twitter Bitcoin endorsements by public personas like Cris Hemsworth, and other fake cryptocurrency investment schemes are on the rise.

If a visitor clicks such a fake ad, they are forwarded to a fake page that resembles the real cryptocurrency trading platforms, and their money is stolen as soon as they initiate the transaction.

Conclusions

How to defend against this threat? Online advertising is no different from financial services in this regard. Wherever online transactions take place, a reliable fraud prevention system is needed to secure your revenues from fraud.

Covery is such an anti-fraud system, capable of identifying fraudulent markers on the fly, alerting business owners of fraudulent activities on their websites, and stopping fraud schemes for good. This is possible due to a variety of technologies — from automated KYC checks to device screening, digital fingerprinting, behavioral analysis, and supervised Machine Learning algorithms. 

Add a flexible rule-based risk logic engine with granular access control and you will see that Covery can provide reliable fraud prevention and help save your marketing budget. Wanna know more? Order a free demo and see for yourself how Covery can protect you from advertising fraud — and much more!