Malicious mobile apps are becoming an increasingly problematic expense for advertisers.
Forensiq, a fraud detection firm, has now announced the results of its recent research, which indicated that mobile security issues produced by malicious apps are generating an additional cost to advertisers that is close to $1 billion every year.
In-app advertising has become a tremendous business, worth an estimated $20 billion in the United States.
This rate is continuing to grow along with the popularity of smartphones. However, of that amount that is being spent on mobile marketing, it is being estimated that about a twentieth of it is actually being wasted. Mobile security issues in the form of fraudulent and malicious apps that can hijack smartphones and convert them into ad-viewing botnets could be costing as much as $1 billion of that $20 billion in advertising money.
There are now many different known forms of these mobile security issues that plague device users and advertisers.
While there are a broad spectrum of different types of mobile fraud, which includes gadget emulation, location spoofing, and mobile user-agent spoofing, in addition to user acquisition scams, Forensiq says that it doesn’t stop there. It claims to have identified a new type of fraud, which it calls “mobile device hijacking.”
What that involves is the use of a malicious app that pretends to act as a human on a device by loading new pages or using various different application functions, each of which cause the device to load advertising. That said, while this may somewhat replicate human behavior, it also loads a much larger number of ads than would be the case with normal usage – up to 20 ads each minute. Often, this occurs in the background while the application in question isn’t being used, so that the owner of the device won’t even see that it is happening.
This mobile security problem is leading to an estimated $1 billion in lost dollars for marketers, but it also causes the device to eat through a user’s battery life and bandwidth. This means that it’s not just advertisers who are paying for this fraud, but the device owners, themselves, will also often face increased costs.
Mobile payments have become quite popular among consumers, but they have also become a target for malicious groups that want to exploit financial information. Approximately 34% of merchants that deal in digital goods believe that the mobile channel is somewhat riskier when compared to conventional channels. The majority of merchants, however, believe that mobile is as risky as any other channel, since all channels have had to deal with fraudulent transactions in the past.