Senators Urge More FTC Involvement in Fighting Digital Ad Fraud, Botnet Use

Two senators are asking the FTC to take a deeper dive into digital advertising fraud inflicted by botnets and malware that they said results in consumers shelling out more for goods and services. In a Monday letter to FTC Chairwoman Edith Ramirez, Democratic Sens. Chuck Schumer of New York and Mark Warner of Virginia said industry efforts to combat fraud in the nearly $60 billion digital ad space are important -- but may not be enough. They said federal regulation must keep pace with oversight of the digital ad space similar to oversight of financial markets. They focused on damage done by bots that they said "plague ... the 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." Citing one study, they wrote that "between 88 and 98 percent of all ad-clicks on major ad platforms such as Facebook, Google, LinkedIn and Yahoo in a given seven day period weren't executed by human beings" but by bots, which allow hackers to hijack multiple computers and commit fraud. By 2025, ad fraud could become the second biggest revenue source, behind drug trafficking, for organized crime groups, they said, citing another report. Schumer and Warner also pointed to a White Ops and the Association of National Advertisers study done this year, writing "this market manipulation scheme will cost advertisers over $7.2 billion in the next year alone" and also will hurt mobile ads as that space grows. The senators want to know what the FTC is doing to fight digital ad fraud, monitor mobile platforms and coordinate with law enforcement and the private sector on this issue, among others. Dave Grimaldi, Interactive Advertising Bureau executive vice president-public policy, said Monday in a statement that IAB shares the senators' concerns and the industry-formed Trustworthy Accountability Group recently launched an anti-fraud seal program (see 1605230010) to improve accountability and transparency in the space. An FTC spokesman said the commission has received the senators' letter, declining further comment.