What Is Online Advertising Fraud?

Over the last 10 years one of the main topics I have covered is advertising fraud. Over and over again fraud keeps on popping up in the industry both from small players to major players. It seems that no matter how much the industry matures, how much technology is created; fraud is a significant issue that siphons both money and confidence away from the industry. I’ve written about banner farms, click-fraud, lead-faking, IP spoofing… you name it. My friend Ben Edelman, famed attorney and Harvard researcher has made it his life to cover issues in interactive advertising and has exposed complex schemes that boggle the mind. Advertising fraud seems to be everywhere in all forms and needs to be exposed, talked about and changed. However, as much as there are obvious kinds of fraud, there are sometimes more nefarious methods of fraud that are not always classified by fraud but still affect the industry significantly and need to be talked about.

Someone recently made the ridiculous argument to me that the word fraud was used too often. Their argument was that certain types of fraud were more “mistakes” of misclassification. They argued that in the performance marketing world, creating leads from non-approved sources wasn’t generally fraud, but more of a quality-control issue. If an advertiser was looking for quality leads, and had specified that “incentivization” of those leads (such as providing money, point or a prize) was not allowed, that if this request wasn’t followed, there wasn’t fraud per-se. I disagreed, and continue to disagree completely with this and believe the entire thought process that goes behind it to be flawed completely. One could claim that this belief was limited to just that person, or a few people – but I’ve found that many people in our industry unfortunately believe this and it’s hard to change their opinion.

Let’s make this very clear: It is my belief that an advertiser who pays for advertising, whether its branded CPM, or performance based CPA or CPL, is completely entitled to get exactly what they pay for in entirety. Any argument that one is allowed to provide an advertiser a service other than what they specifically paid for and agreed on is fundamentally flawed. I’ve unfortunately heard the argument many, many times from people within the industry, especially on the performance advertising side: “If the advertiser doesn’t complain, what harm is it? They are getting results and we are producing results.” I believe those that argue that don’t actually believe this, but instead provide this as an excuse to themselves or their employees that there is something legit about what is going on.

According to Wikipedia, “fraud is an intentional deception made for personal gain.” In interactive advertising, I believe that this definition is extremely important and should be taken seriously in how the industry deals with fraud. While there will be honest mistakes where clear directions and restrictions are not always communicated by advertisers, as we mature as an industry this is less and less likely. Most of the “mistakes” that occur in the industry are fictitious in my opinion, but instead purposeful fraud by some party. We do have to be careful however who to blame: a specific network or company may not be the culprit but instead may just have a horrible quality and compliance team. In this case still, we need to somehow hold accountable those companies that seem to have problems over and over again and blame it on third parties – are they actually that incompetent, or are they purposely ignoring obvious sides of fraud and deception in order to benefit financially?