Two US Senators Call On FTC To Investigate Online Ad Fraud

With advertising fraud online getting out of hand, U.S. Senators Mark Warner (D-VA) and Chuck Schumer (D-NY) are calling on the Federal Trade Commission to investigate fraud in the digital advertising marketplace.

In a letter to FTC Chairwoman Edith Ramirez, the senators, who are both members of the Senate Banking Committee, contend the majority of the ad clicks online are from so-called bots and not humans. They pointed to studies that show fraud is alive and well in the $60 billion digital ad market, with one study showing that as high as 98 percent of all ad clicks on major advertising platforms, including Google, Yahoo, LinkedIn and Facebook, were executed by computer automated programs or bots instead of humans in a seven-day period the researchers looked at.

“These programs allow hackers to seize control of multiple computers remotely, providing them access to personal information, as well as the ability to remotely install malware to engage in advertising fraud, entirely unbeknownst to the computer’s true owner,” the senators said in the letter. “Bots plague the digital advertising space by creating fake consumer traffic, artificially driving up the cost of advertising in the same way human fraudsters can manipulate the price of a stock by creating artificial trading volume.”

According to the senators, the ad fraud market has gotten so huge that it is drawing the interest of organized crime and that a recent report showed that, by 2025, ad fraud could be the second-biggest source of revenue for organized crime groups, second only to drug trafficking.

The senators also took issue with voluntary, market-based oversight of the industry, saying it remains to be seen if it is enough to protect consumers and advertisers from online ad fraud. “The cost of pervasive fraud in the digital advertising space will ultimately be paid by the American consumer in the form of higher prices for goods and services,” said Warner and Schumer in the letter to the FTC. “Just as federal regulation has evolved to keep pace with the ever-growing sophistication of our financial markets, so must oversight of the digital advertising space.”