Humans make only 60% of internet traffic
The covid19 pandemic left a huge global impact. Industries tumbled, systems collapsed, the market hit an all-time low. People were confined within the four walls of their homes with laptops and smartphones as their entertainment and work needs. Mobile internet usage increased by 67% globally. Being locked down didn’t dampen our appetite for shopping.
The Indian eCommerce witnessed a huge surge owing to the pandemic. The eCommerce industry, driven by mobile shopping, is projected to grow 21% annually over the next four years. Clearly, the eCommerce industry has by far been the biggest beneficiary of Covid19. This increase in online activity and ad spending has also led to an exponential increase in ad fraud in the eCommerce industry.
Click fraud activity surged by 21% globally from March to May 20. Click fraud can be defined as the fraudulent clicking of PPC adverts (pay per click) to generate fraudulent charges for advertisers. One in every 10 clicks across eCommerce campaigns is found to be fraudulent. Business ads are deliberately being clicked to waste ad budgets. Fraudsters have a long-standing army of bots to disguise as humans and penetrate the campaigns affecting the performance and draining ad budgets. Studies have estimated that businesses lost $35 billion in 2020 on account of ad fraud and the figure is set to swell in 2021.
App Install Fraud is another such threat that is looming over the eCommerce industry. There are a plethora of ways it takes place. Fraudsters redirect users to install the app from third-party APK stores thus Play Store statistics do not increase for the advertiser which in turn impacts the brand image and competitive advantage. Despite spending money on install Campaigns, the revenue is pocketed by the fraudsters. Certain app packages at APK stores also contain malicious codes that can alter the app’s behavior and harm the device. Can more damage be done?
Fake engagements are being created through the pool of devices to give the impression of legitimate activity, also called Device Farms. Using Click spamming, these fraudsters are generating fake clicks in the background to capture organic app installs. Sophisticated forms of technology are evolving where bots mirror human behavior making it difficult to distinguish real users from fake users!
In one such instance, we analyzed a leading online e-commerce portal. an ‘App Install’ campaign
It was identified that nearly 55% of the inorganic installs were fraudulent. Deep diving further into fake installs, it was concluded that fraud is an industry menace. Non-play store installs accounted for 42% of the fraudulent activity followed by fake attribution at 25%. The platform had been spending on marketing for creating visibility of their app and had a healthy spend towards this channel but ROI’s with conversions was always a suspect, thus draining the ad budgets.
The eCommerce industry is also marred with affiliate marketing fraud where brands pay their publisher partners based on the campaign performance and not the potential. Affiliate marketing has been a marketer’s favorite strategy to increase brand awareness and increase sales. The fraud rate in major partners was discovered to be over 50%. The potential loss of revenue can be gauged with the above figure.
A quick shift to eCommerce has brought with it another most serious type of fraud- Account Takeover Fraud. Criminals gain access to genuine accounts by obtaining stolen passwords, personal information and leveraging this information to access eCommerce accounts. This mostly takes place via phishing scams on mails and SMS. Fraudsters disguising as brand representatives share malicious links which help them with users’ personal information. They then get access to the account and can make purchases, initiate fraudulent transactions, and can also lead to stolen identity fraud. All such issues have a negative impact on the brand thus losing reputation and trust amongst its consumers, apart from revenue losses.
The digital landscape is ever-expanding along with the evolution in sophisticated technologies. Although traditional brick-and-mortar shops are to exist, eCommerce will be the go-to place for consumers. The criminals are always innovating new ways and techniques to defraud the system and infiltrate the ad ecosystem. ATO (Account Takeover Fraud) is expected to become rampant in the eCommerce space as real-time transaction approvals rise and data breaches increase. There is a strong need to have robust ad fraud prevention tools in place to analyze the transaction data, whether the data is genuine or fraudulent, in real-time. There’s a strong mechanism required to keep validating customers which may otherwise lead to financial fraud, identity theft among others. The new trend of Buy Now Pay Later (BNPL) trend further opens the door for these criminals to exploit the customers and system. BNPL fraud takes a longer lag time between fraud and fraud detection.
The rising eCommerce fraud has brought to light major gaps in the digital ecosystem, where there is money, there will be a fraud. It is imperative to mitigate such threats and have a well-designed solution in place to identify and address all possible types of threat that not only affects a business but also damages its reputation. Online retail owners and platforms should analyze and monitor all relevant transactions at the minutest level to battle the threat.
Ad fraud is real! The sooner digested and worked on, the better it will be in the near future. Awareness is the first step followed by a diligent fraud prevention tool in place.