In-App Mobile Ad Fraud: What You Need to Know

Mobile advertising remains one of the most powerful marketing channels for businesses across industries.

Just think…when was the last time you met someone who didn’t own a smartphone? The potential impact of advertising through mobile apps should not be underestimated. As a result, more companies are investing in in-app advertising to expand their reach and connect with users in real time.

But with opportunity comes risk. Mobile advertising has also become a target for fraudsters who exploit app-based platforms to siphon off marketing dollars through deceptive practices. Mobile ad fraud can significantly damage a company’s return on investment, distort performance data, and harm brand trust.

So, what exactly is mobile ad fraud? How does it work? What could it cost you? Most importantly, what can you do to protect your business against fraudsters who use malicious mobile apps to steal money from your marketing budget?

What Is Mobile Ad Fraud?

Mobile ad fraud is the process of running software on mobile devices that is designed to steal money from advertisers.

This is done through a variety of techniques, including in-app, mobile web, and malware-based fraud.

Ad fraud in mobile advertising should not be confused with mobile fraud—which is the unauthorized use, tampering, or manipulation of a cellular phone or service (such as SIM swapping, cloning, and subscriber fraud).

How Do Mobile Fraud Schemes Work?

There are several strategies that fraudsters can use to steal money from advertisers (and even customers). Mobile fraud schemes can be divided into several broad categories based on whether they work in an app, via a browser, or use malware to take control of a mobile device as part of a bot fraud scheme.

Let’s take a closer look at some of the different types of mobile ad fraud and how they work.

In-App Mobile Fraud Schemes

Advertising fraud in mobile apps is exactly what it sounds like: a fraudster takes advantage of an app on a mobile app storefront to defraud advertisers. Ad fraud on mobile apps can work in a few different ways depending on the specific scheme the fraudster employs.

For example, a fraudster could commit app advertising fraud by:

• Hiding ads to generate false impressions on ones that pay by the impression. This can involve tricks like pixel stuffing or ad stacking. The app registers that the user “saw” the ad, but the user doesn’t actually see the ad.
• Deploying malware through the app to click on in-app ads when the device is inactive or turn it into a node for a botnet. Sometimes called software development kit (SDK) hacking, the fraudster adds malicious code to the app during the app’s creation or can add it after the fact during an app update. This is a common issue for freeware apps in mobile app stores.
• Engaging in cookie stuffing—putting cookies on the device so that if the user coincidentally happens to visit an advertiser’s site later, the fraudster gets credit for “referring” them.

Malware

Malware in mobile apps is a growing concern, with bad actors continuously finding new ways to exploit app stores for financial gain. PCMag recently reported on an incident where over 90 malicious apps on Google Play were downloaded over 5.5 million times.

These threats can often go undetected in both legitimate and rogue apps, making them especially dangerous. With thousands of new apps published every day, even major platforms like the App Store and Google Play aren't immune to letting malicious apps slip through.

Mobile Web Fraud

Web-based fraud targeting mobile devices may use a lot of techniques similar to the ones that target non-mobile web traffic. Tactics like domain spoofing, geo masking, pixel/cookie stuffing, and ad injection work just as well against mobile web browsers as they do against desktop browsers.

Here’s a quick explanation of key types of mobile ad fraud that occurs on web browsers:

Domain Spoofing: The imitation of a website domain by a fraudster to make it look like a more valuable website. The goal is to either trick users into visiting the fake website and/or fool advertisers into spending ad revenue on the spoofed site.

Geo Masking: When fraudsters obfuscate the geographic origin of the leads they generate by spoofing their IP addresses. This is used in mobile web ad campaigns where the pay-per-lead varies depending on where the lead is from (e.g., geotargeting campaigns).

Ad Injection: Fraudsters can use browser extensions, plugins, malware, etc., to put ads on websites where they wouldn’t normally appear or replace existing ads with ones that the fraudster can claim revenue from.

How Much Does Mobile Ad Fraud Cost?

So, how much does mobile ad fraud cost?

Mobile ad fraud is a multibillion-dollar problem that continues to escalate as mobile advertising spend increases globally. By recent estimates, mobile advertising spending will continue to grow in 2025.

But how much of that will be lost to ad fraud?

It’s difficult to say, since the numbers are always changing. By our estimates, mobile fraud alone could cost businesses between $2.08 billion and $10.4 billion per year. It should be noted that this is a conservative estimate that doesn’t account for the growth in mobile device use over that time period. These costs stem from fake impressions, bot-driven clicks, and background ad activity that drains budgets without delivering real engagement.

The financial impact also includes:

TCPA Violation Fines and Lawsuits

When fraudsters use mobile fraud techniques to send fake leads to you, that can result in trying to reach out to consumers who never actually opted in to receive communications from you.

How? Because the fraudster may have used real data stolen from an actual person to make the fake lead look real. This can result in increased complaints and even lead to TCPA fines/lawsuits that cost between $500 and $1,500 per incident.

Loss of Reputation

Regulatory compliance penalties—especially ones involving large class-action lawsuits—are frequently big news. Getting hit with a TCPA violation can cause harm to your brand image that can be difficult to repair. This, in turn, can drive away business.

Wasted Sales Team Time

Reaching out to bad leads can be a waste of time for your sales team—one that drives your ROI from sales team labor down as they struggle to close deals with people who weren’t interested in your products or services. This can also be frustrating for sales team members—increasing stress and their likelihood of burning out or quitting.

Wasted Ad Spend

Of course, the most direct impact of mobile ad fraud is that the money spent on fraudulent impressions, clicks, and leads is completely wasted. A fake click or lead made by a zombie bot from a piece of malware hidden in a mobile app is never going to convert into a customer. This drives down your marketing ROI.

Even worse, the initial data may look like your mobile ads are working really well—leading you to double down on an ineffective ad campaign so even more money is wasted.

The Importance of Mobile Ad Fraud Detection and Prevention

So, what can you do to fight mobile fraud and keep it from dragging your mobile ads down?

Trying to fight ad fraud manually is a Herculean task. The sheer number of new freeware/freemium apps that hit mobile app storefronts each day and the rate at which they’re added to advertising networks make it nearly impossible to keep up.

When fraudsters are caught submitting malware-laden apps to one storefront, they simply come up with a new business name and submit new freeware within the week. They may never run out of phony business names to use to commit their fraud.

The best mobile ad fraud prevention tools work by detecting fraud in real time and put a stop to it before you lose money.

A Proactive Approach to Mobile Ad Fraud

So, what can you do?

Mobile ad fraud isn’t going anywhere. In fact, it’s only becoming more prevalent as businesses spend more on mobile advertising. Businesses need to focus on staying one step ahead.

One easy way to fight mobile ad fraud is to use a proven ad fraud solution. Anura is a dedicated ad fraud solution that can identify ad fraud in real time and provide you with all the analytics you need to prove it.

This way, you can disavow fake impressions, leads, and clicks before you pay the fraudster or, if necessary, get credits or refunds from your advertising network partner to recover your losses.

Get ad fraud protection that works around the clock to safeguard your business from the effects of fraud. Talk to an expert today to get started.