Fraud Hits Us Where We Live

by John Motavalli, Columnist, December 28, 2016

This column is about fraud, how one case of it hit me, and how it relates to the industry we work in.

Besides writing for MediaPost, I sell antiquarian books on eBay, and have been doing so since the ’90s. It’s wonderful work in some ways, but one of eBay’s most closely held secrets is how easy it is for international criminals to game its system. If one sells items to a few rogue countries, the chances of being faced with an item-not-received fraud case is about 100%.

Case in point, Armenia, one of the only Christian countries in Asia, and one long dominated by Russia. Russia and its satellites have long been bastions of Internet fraud, so perhaps it should not surprise one that shipping items to Armenia, Kazakhstan, Uzbekistan and the like is an iffy business.

Recently I sold a valuable 1801 leather-bound book called The Armenian. I was dismayed to see that the buyer was in Armenia, and his name sounded familiar. I was later told by an eBay supervisor, who was also in Asia, that this same person had three times bought items from me and then claimed not to have received them. Three times. Sure enough, a couple weeks after I shipped the item, I had received an item-not-received “case” despite the fact that I had shipped with a tracking number proving the item had been sent. 

The buyer, who came across in smarmy broken English as “sincere,” admitted there were major issues with the Armenian post office, but he also knew that no system of mail from the U.S. to Armenia tracks items to delivery point because the Armenian postal system does not cooperate and confirm delivery.

A huge loophole, allowing Armenian buyers to easily buy any item on eBay and then claim non-receipt. eBay’s automated response system immediately refunds these buyers. I should know, as this has now happened three times. In this case, the buyer got a refund of more than $100. Indeed, there is simply no way to ship safely to Armenia.

I spent two hours on the phone with eBay, first talking to a couple of reps in the Philippines, but finally making it to “Josh J.” of the Leadership Team. Was that his real name? Who knows? He refused to confirm what level of fraud was coming from Armenia, or that there was any way to ship to Armenia safely, but he did advise me not to ship there. But he would not give me a refund.

That is their policy, which is great for them, but not so great for the sellers on eBay. After a while, I began to feel like Albert Brooks in “Lost in America,” trying to convince a Vegas casino minion to return gambling losses. It wasn’t going to happen.

The online universe is rife with complaints about similar issues with Armenia, Romania, Nigeria.

This is relevant to programmatic advertising because international fraud is a huge problem and is threatening to seriously harm this industry. Incapsula reported two years ago that Bots account for 56% of all Web site traffic. Another estimate on Adexchanger indicated “the more dire predictions state 40% of impressions traded on an open exchange or mobile clicks or some other online advertising KPI come from fraudulent sources.” A third study from ANA/White Ops puts the number closer to 52%.

These are absurdly high numbers, making eBay look relatively safe. Consider what would happen if eBay fraud were as high as that of ad tech. It would be bankrupt in a week. The auction service reported more than $20 billion in “gross merchandise volume” for the third quarter. eBay claims a fraud rate of .01%, but we can’t know what the real figure is. eBay fraud actually used to be worse than it is now. But improved tracking means that fraud in some countries has been greatly reduced.

But it got me thinking.

The rip-off I experienced was relatively minor, $100, and the item didn’t cost much in the first place. The cost of doing business. But what if I knew that more than 50% of the ad impressions I was paying for were bots — fraudulent impressions that nobody actually experienced.

That would be a lot more annoying.

There is the case of fraud site modernbaby.com (since vanished), which offered 19 million impressions per day on one exchange, or another one, interiorcomplex.com (also long gone), which claimed 30 million impressions per day on another exchange. The same ANA/WhiteOps study cited above refers to ad stuffing or ad stacking, in which bot bandits place “teeny one-pixel-by-one-pixel windows throughout a Web page and [serve] ads into those virtually invisible ad spaces, or stack layers of ads one on top of the other in the same space but only the top ad is visible. Some pages observed in a study by the ANA and digital security firm WhiteOps found 85 ads on a single page where few if any ads were actually visible.

In the old days, search engines were so primitive that those seeking better placement could use what was then called “word stuffing,” just repeating the relevant terms in non-display code. But today’s fraud is so much more sophisticated than that. Frankly, it makes my head spin.

If you have a good example of what’s going on fraud-wise, let us know by commenting in this space. 

MediaPost.com: Search Marketing Daily

(15)