The digital age has created a new issue for advertisers to tackle when implementing a marketing strategy—combating ad fraud. What is ad fraud? Ad fraud can occur in a number of ways, but the basic idea is that advertisers are tricked into paying for online advertisements that are not seen by actual consumers.
Here are some common forms of ad fraud: bots can generate fake traffic to websites creating the appearance of human activity; individuals can be hired to click on ads, misrepresenting the number of real consumers viewing the ad; ad space can be purchased on websites that appear legitimate, but aren’t; multiple ads can be stacked on top of each other so the underlying ads are hidden; or the ad can be such a small pixelation that it is imperceptible to the human eye.
Who would do such a thing? Unfortunately, anyone who stands to make a buck from the sale of online advertisements can perpetrate such abuse. It can be publishers, who sell advertisement placements, also known as inventory, or supply-side platforms that publishers use to sell their inventory. Even the companies that advertisers rely on to purchase inventory may fail to adequately protect the advertiser.
And, it’s not just small companies that may be taken advantage of. Recently, Uber Technologies, Inc. (“Uber”) filed a complaint against Fetch Media, Ltd. (“Fetch”), Uber’s mobile advertising agency, for claims of ad fraud. Uber, the ridesharing service, gains new riders and drivers through downloads of its smartphone app. Downloads can happen organically, meaning the user directly accesses the app store and downloads the Uber app based on the user’s independent knowledge of Uber, or the app can be downloaded using an advertisement that appears on a website or other app. When potential riders or drivers click on an Uber ad, they are directed to the app store, where they can download the Uber app. For every download of the Uber app generated from an advertisement, Uber pays the source of the inventory.
In the lawsuit, Uber claims that it relied on Fetch’s expertise to recommend networks (which are companies that buy and sell inventory) and publishers. Fetch itself also purchased inventory on behalf of Uber. Uber and Fetch then used a third-party to track which ad generated each download of the Uber app so Uber could properly credit the publisher or network. According to Uber, while managing the advertising campaign, Fetch was responsible for tasks such as (1) ensuring that the publishers and networks reported accurate information to the third-party tracker; and (2) for preventing and identifying any fraud.
Uber claims it discovered fraudulent activity because it had received complaints from the public that its ads were appearing on certain websites, like Breitbart.com, that Uber had put on its blacklist. Uber was unaware of these ad placements prior to the complaints because the transparency reports that Fetch provided to Uber contained misleading URL addresses that hid the placement’s affiliation with Breitbart.
The lawsuit also alleges that Fetch allowed networks and publishers to steal credit for organic installations of the Uber app and for installations that were attributable to other sources. According to Uber, after it stopped its ad campaign with Fetch, the number of total Uber app installations did not decrease, as one would expect if installations were truly attributable to advertisements. Rather, the number of installations attributable to advertising dropped, while the number of organic installations rose by an equal amount, suggesting that installations reported to have been from advertisements were actually organic installations all along. Additionally, Uber alleged that Fetch failed to disclose financial incentives it was receiving from publishers and networks that it did not pass along to Uber.
Uber brought claims of breach of contract, breach of good faith and fair dealing, breach of fiduciary duty, constructive fraud, fraud, negligent misrepresentation, professional negligence, negligence, unfair competition, and unjust enrichment claiming that it spent millions of dollars on advertising it would not have spent but for Fetch’s conduct.
The lesson to be learned is that there are many forms of ad fraud that can be committed by different players in the chain of buying and selling online advertisement placements. Marketers need to be vigilant and actively review their campaigns. If they come across unscrupulous agencies or publishers, the law provides a means of recourse.
If you believe you’ve been a victim of ad fraud, Astrachan Gunst Thomas, P.C. can help. Contact Jim Astrachan at 410-783-3550 (firstname.lastname@example.org) or Julia Bartels at 410-783-3533 (email@example.com).