6 Shocking Truths About Online Fraud

Transcription

1 EBOOK 6 Shocking Truths About Online Fraud a publication from

2 Introduction You are being cheated out of revenue by fraudsters who have found vulnerabilities in your advertising and lead generation program. You may not realize it, or you may just tolerate a certain level of fraud because you consider it part of the cost of doing business. No one is out there policing fraud activity, and as a result, online ad fraud is on the rise. Your marketing department may be allocating tens of thousands of dollars per month to capture the attention of prospective customers. How much is going to waste? The Internet Advertising Board reported $42.78 billion in revenue during 2013 and $11.6 billion during early 2014 alone. As online ad revenues expand, they have increasingly become targets for fraudsters who seek to siphon that money illegitimately. White Ops CEO Mike Tiffany estimates that the industry sustains a $6-10 billion loss to advertising fraud alone each year. It s been estimated that up to 30 percent of online ad spending is wasted, and at least a third of online ad traffic is generated by bots, or robotic programs, that troll the internet, viewing, clicking and form filling automatically. You may have heard that all sorts of unsavory activities occur online, but you can t find them through a Google search. That s because, like drug dealers, gun runners and hit men, online ad fraudsters operate in a sketchy underworld known as the deep web, using encrypted currency and techniques to cover their tracks. When you know where to look, you will be shocked at the global marketplace you ll find for black market goods and services. The Hack Luxemborg Conference organizers say, Within a few months of its availability, new technology helps the bad guys at least as much as it helps the good guys. It s a game of cat and mouse. The moment a new anti-hacking technique becomes available, the race is on to defeat it. You don t have to put up with online fraud. In this ebook we will look at the most common tactics black hat hackers employ to siphon money from the system. They may be gaining pennies per attack, but those coins add up and can create a significant drain on your budget. Let s look at some of the many ways you are getting ripped off.

3 01 Not Where and Not Who One of the primary ways fraudulent operators avoid detection is by masking where they are and who they are. There are two reasons. First, if no one knows where fraudsters are hiding, then they cannot be caught. Second, sellers and buyers of most products and services need to be in the same geographic area, or at least the same country. An online university in the United States is generally seeking to enroll US students. But a fraudster may be operating in another country altogether. Proxy servers that route traffic through multiple locations can be used for legitimate business to balance traffic load. Anonymous proxy servers don t pass along origin details and will obscure a user s true location. Another common method used to hide online tracks is through the use of a Virtual Private Network, or VPN. Anyone, including hackers, can use VPNs to repurpose the public internet to create a secure private network. A VPN encrypts data and routes it through one or more servers, making activity, identity and location private. Botnets, which are not the same as bots, are armies of computers that have been taken over by black hats to carry out fraudulent activity. Each computer in a botnet is known as a zombie. Hackers redirect traffic through zombie machines. In Russia but want to appear to be in America? Route your requests through U.S. based zombies. When you surf the web, details about your operating system, browser and device are available to web programmers. They know you are on a MacBook Pro using Chrome. Website owners know a lot of facts about visitors unless the facts have been obscured. Your Computer Proxy Switcher Program Perhaps all is not what it seems. SHAKESPEARE Proxy Servers WWW Server Proxy servers effectively mask client s IP address. WWW server only receives addresses of proxy servers.

4 Your Leads Are Belong to Us Suddenly you ve got more sales leads than 02All before. They look great. But are they real? An increasing and worrisome number of leads are created by robotic programs, AKA bots. The leads may look like the real deal, but just try to make contact with a human. No one s there. Here s how it works. A black hat hacker sets up a program, known as a bot, to crawl the web and look for empty forms. Bots, or robotic programs, can accomplish the same tasks as humans. In essence, bots are internet users with remote control brains, doing a whole lot of clicking and typing on behalf of a human programmer who stands to make a lot of money selling leads that look legit. Black hats may target a specific industry, such as education, where leads garner the highest prices. Any lead can be customized to fit the requirements of the buyer. These leads are then sold to unsuspecting aggregators and advertisers, generally bundled with legitimate leads so as to avoid detection. Programmatic Advertising The process of placing ads online has become automated, and advertisers increasingly rely on algorithms and analytics to determine which ads are placed in front of which users. Attributes like location, device and browser history all play a role in programmatic ad placement. How easy is it to fake a lead? There are metrics that will expose fraudulent leads, and white hat programmers can add features to weed out lead forms filled out by bots. For example, a lead can be designed with what s known as a honeypot, or a field that s invisible to humans. A bot will add data to the honeypot field, and give itself away.

5 03 See it, Click It Pay-per-click advertising is the fastest growing advertising segment, and for good reason: when it s legit, you re only paying for ads that appear to your target audience. How do you know whether the clicks you re paying for are the real deal? In the online advertising world, it s increasingly difficult to tell when a click, or even an impression, is the real deal. As an advertiser, you think you re paying for legitimate leads and would-be clients, but your clicks and impressions could actually be coming from a heap of robots, shady competitors, and paid humans ramping up your costs through click fraud. A certain percentage of your clicks and impressions budget goes straight into a fraudster s pocket. Data from the Click Forensics Fraud Report shows that the first half of 2013 alone saw upwards of 140 million invalid clicks, priced at an industry average of $0.38 per click. That s $52 million down the garbage disposal in just half a year. Click fraud comes in two flavors. One type is human-driven, where competitors pay people to mindlessly click on ads as a way of driving up the cost to you. You can find dozens of sites that turn humans into clicking machines by offering cash incentives for mindless clicks. Even if your ad traffic is coming from living, breathing users, they could be clicking for all the wrong reasons. The other kind of click fraud is robot-driven, where bots pose as humans so that they can click on your ads, or appear to be looking at your ads (AKA impressions), and collect the money you would ve otherwise spent on real prospects clicks. We re not talking chump change here. Pay-per-click advertisements are expensive, and botnet traffic will cost the advertising industry $11.6 billion in wasted revenue by the end of 2014, according to Solve Media. This is all complicated by the fact that most online advertising today relies on impressions, rather than actual clicking, so click fraud is even easier to accomplish. The first half of 2013 alone saw upwards of 140 million invalid clicks, priced at an industry average of $0.38 per click. That s $52 million down the garbage disposal in just half a year. SOURCE: CLICK FORENSICS FRAUD REPORT

6 04 Mobile fraud Mobile is among the fastest growing marketing mediums, following overall mobile usage trends. The platform is appealing to advertisers who personalize and localize content. As mobile marketing campaigns continue to climb, growth is mirrored by mobile fraud. Location-based advertising is incredibly important for mobile marketing. Advertisers better reach target audiences through location-based data, demographics, and by fulfilling location-specific needs. At the same time, mobile advertising involving location-based data has doubled in the last year alone; today, almost 70% of mobile ads employ location data. But due to fraud, those locations are inaccurate more often than not. As much as two-thirds of location data from mobile publishers is bogus, according to a report from ThinkNear, a firm that specializes in location-targeted advertising. Mobile usage currently accounts for 25 percent of overall web usage worldwide (it s about 19 percent in the United States, and even higher in Asia) and in the past six years, mobile advertising has taken an increasingly larger share of advertising budgets. Overall ad revenue from mobile channels is upwards of $38 billion. Advertisers who launch mobile marketing campaigns need to battle click fraud, ad injection, and location fraud. Click fraud remains a persistent issue in online advertising in general, but on mobile, there s also an issue of accidental clicks due to the clumsiness of using touch-screens. The Rise of Mobile 100% 90% 80% 70% 60% 50% 40% Non-Mobile 30% Mobile Apps 20% 10% Mobile Web APP Iovation Mobile Transaction Trend Source: Iovation

7 05 Click to Call Telephone scams are old hat, but adding the layer of online interaction is a fairly new development fueled by rising mobile usage. Also known as request a call, click-to-call (CTC) occurs when a consumer clicks an onscreen button in order to receive a sales call. The technology is said to dramatically improve conversion rates. A report by Forrester Research noted a 143 percent average ROI following implementation. And talk about fly by night. Pickles says that fraudulent operators will move quickly through geographic areas, placing and pulling mobile ads. They may hit Los Angeles in the morning, Chicago at noon, and Atlanta in the evening, further evading detection. There are many ways to fraudulently generate inbound calls to advertisers, according to Jaimie Pickles of WeSpeakInsurance.com. Pickles recently presented industry findings to the Federal Trade Commission. In mobile search, lead publishers may infringe on trademarks or buy marketing restricted keywords such as a competitor s brand name. Fraudulent operators may also buy web addresses that include a famous brand within the URL, but in fact have nothing to do with that brand. CALL NOW! Consumers are deceived into calling carriers they didn t intend to call when they are routed to companies other than the ones they wanted to reach. What s even worse is that the fraudsters capture mobile numbers and are able send unauthorized text messages. That s a TCPA violation. At no point in the process did the consumer expressly agree to receive a message.

8 AD! 06 Ad Stacking Publishers and their intermediaries may accept payment for an ad impression, but display the ad in such a way that site visitors will see it in a distorted manner, see only part of it, or not see it at all. The industry considers this a form of impression fraud. Kevin Springborn is chief architect at M.Labs, a Wisconsin-based firm that specializes in online fraud detection. He defines an ad stack as several ads placed immediately on top of one another so site users can only see the ones on top, and not those beneath. From the advertiser s point of view, all those ads ran. But in reality, the user couldn t possibly have seen any of the underlying ads, only viewing the ones on top. Some publishers will stack two or more ads immediately next to each other with no content in between. This is not a good situation for the advertiser. Advertisers want content next to their ads in order to draw attention and interaction. Users tend to ignore globs of ads floating on their own. ADVERTISEMENT Less crafty publishers and site owners will stack five instances of the same ad together. More clever fraudsters tend instead to run stacked ads from a variety of providers such as Google and AppNexus, and interweave each of them individually in such a way that makes it hard to detect. Meanwhile, the site owners receive a separate check from each provider. Publishers may display ads entirely off the monitor so users cannot see them; others display ads in such a small frame that they can only be seen with a magnifying glass; still others display ads in such rapid succession that users may only see each for a few seconds. At present, the penalty for getting caught running stacked ads and other types of impression fraud depends on the exchange network. AD JUST FOR YOU CLICK HERE DON T MISS THIS OFFER

9 Now What? By this point, your eyes have been opened to the shocking and secret world of underground fraud that s rampant in online advertising and lead generation. It seems to be everywhere, and while lots of people are losing money, few are engaged in stopping the scams. Are you mad as hell and not going to take it anymore? You dont have to take ad fraud, and the subsequent hit to your budget, for granted. Read the companion ebook, 6 Key Data Points You Must Have to Avoid Online Fraud. You ll get answers to all your fraud solution questions. And in the meanwhile, keep your eyes open. Don t be a victim.

10 Create your free account and love your leads. Know the value of what you sell and buy. Get started at facebook.com/universalleadid twitter.com/leadid linkedin.com/company/leadid 2014 LeadiD All Rights Reserved