Forecast: Ad fraud to push $35 billion this year

Fraudsters have been making bank since the COVID pandemic sent more consumers scurrying online not only for work but to buy groceries, have virtual meet-ups with friends, and get the latest on the pandemic, elections, and other breaking news. And, according to new data out from CHEQ the cost is being felt by legitimate marketers, brands, and publishers.

by Kristina Knight

According to their experts digital ad fraud will cost businesses about $35 billion the year in direct costs with another $5 billion in indirect costs through diverse economic and social costs. If their forecast is correct, digital ad fraud will surpass credit card fraud, which stands at $27 billion.

"The level of ad fraud is now staggering. The digital advertising sector has the unwelcome distinction of having higher fraud rates than multi-trillion-dollar sectors including healthcare, credit, and insurance. Though there has been much industry progress to stamp out fraud in digital advertising, the systemic complexity, competing interests, and sophistication of attacks particularly during a recession, have made the ecosystem a breeding ground for bad actors," said Professor Robert Cavazos.

Between the American Presidential election and the push to move business and entertainment online because of the COVID-19 pandemic, experts say it was the perfect storm of opportunity for fraudsters. They believe about $1.3 billion in political advertising will be lost to fraud; similar findings have been found in disparate advertising sectors. However, the experts say that insurance is perhaps one of the focal points, with fraud rates there 1.8x higher than fraud rates in health care and 13x higher than fraud rates in credit cards.

"Despite a tumultuous year for marketers, digital advertising now represents the main destination for ad dollars. In this situation, we see that fraudsters have ready access to the most advanced tools ever available to commit fraud at scale. In addition, incentives to commit ad fraud have only grown due to the economic downturn, creating a perfect storm for digital ad fraud," said Guy Tytunovich, CEO & Co-Founder, CHEQ.

More data from the CHEQ report can be accessed here.

Tags: ad fraud, ad fraud trends, advertising, advertising fraud, CHEQ, ecommerce fraud