A look at the growing mobile app fraud problem

Since the mobile app industry boom, the demand for mobile services has grown rapidly and the market is expected to be worth $189 billion. Unfortunately, this growth has attracted the attention of fraudsters who have recognised the potential to make a lot of illegitimate money. Things like app install fraud have been problematic since the mid-2000s but the issue has worsened rapidly over the last three years. In fact, fraudulent activity rose by 30% in Q1 of 2018 when compared to the 2017 average.

Now that the mobile app market has become such a lucrative global industry, fraudsters are putting more effort into taking advantage of flaws in the system using automated bots and malicious software programs. This has led to an increasing amount of lost revenue for mobile developers and mobile advertisers. In 2018, the industry saw losses of $2 billion from app install fraud which is just one part of the overall problem.

Mobile app fraud has affected each area of the mobile app industry differently. Shopping and retail apps have been hit the hardest with the highest levels of fraudulent activity in all quarters of 2017. During Q1 of 2018, the mobile eCommerce sector lost around $275 million as a result of app install fraud. Mobile gaming also saw losses of around $103 million dollars from inauthentic activity and automated click bots.

While the industry has begun to recognise the severity of the growing fraud issue, it has still been relatively slow to react and is struggling to keep up with the growing complexity of fraudulent techniques. The filters which have been used until now haven’t been efficient enough to discourage fraudsters. They commonly work by filtering out IPs that are related to known proxy servers. However, on average, this only blocks between 2% and 3% of malicious behaviour.

Sophisticated coding techniques have allowed fraudsters to emulate in-app activity and generate false records. Click flooding, for example, generates fake click reports and is one of the most common techniques used across mobile platforms like iOS. The ability of fraudulent programmers to adapt is the biggest threat to mobile marketers. The lack of a diverse anti-fraud system that stretches across all mobile platforms provides too much opportunity for foul play and it seems the problem isn’t going to solve itself unless industry-wide action is taken.