New Tool Shines Light on $5 Billion Web Traffic Fraud Racket

NEWS ANALYSIS: As much as one-third of the money spent on digital advertising are spent on fraudulent traffic most of generated by bots, not web-browsing humans.

By now you probably have an idea of how online advertising works. A website presents information that people want to see and located in the vicinity of the information are advertisements for you to consider while viewing the information you actually came for.

Sometimes those ads are for display only and don’t require the user to take any action, but in other cases they’re ads that require the user to click on the ad for the site to get paid.

In some ways this is similar to the way that newspapers and television programs get paid by presenting ads to you while you read or watch. But with the internet, there’s an additional dimension of interactivity which allows the advertiser to pay extra when they know that someone is actually going to their site for more information.

But the whole advertising process depends on humans seeing the ads, and then acting on the information that the ads present. Unscrupulous actors have found ways to have software robots, or bots, pretend to be humans and bring in more advertising dollars without inducing more people to view the advertising.

In some cases a website with information that people want may offer to share some of the advertising revenue with sites that drive traffic to them. This may be a website with links to stories that are chosen because the original publisher was willing to pay the linking site for the traffic that is passed on. When a website passes on bogus traffic, this is considered click through fraud. It’s very common.

There’s plenty of ecommerce fraud going around, much of it in the form of purchases using stolen credit card numbers. The advent of the EMV chip in cards has reduced the usefulness of physical cards because it’s impossible to create counterfeit EMV chips. However this hasn’t stopped online fraud, normally called “card-not-present” fraud, which is what happens when someone steals your card number, and uses it to buy stuff online. This increase in fraud was predicted when EMV chips became common because the same thing has happened elsewhere.

Another type of fraud is called “traffic fraud,” which takes place when bogus traffic is counted as real and the advertiser pays the fraudster. Fortunately, there are now ways to fight traffic fraud.

I spent part of a day with Adam Rogas, CEO of NS8, a company that makes traffic management and security software that’s designed to detect fraudulent activity. Rogas said that he’s seen companies try out his TrueStats software only to find that 70 percent of their traffic was fraudulent. He said that NS8 provides the software for free for two weeks so that companies can try it out long enough to discover how much of their traffic is fraudulent.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...