Click fraud the old fashioned way | Hacker News Reader

Click fraud the old fashioned way

cringely.com

Now here’s the strangest part: having discovered this blatant fraud my friend walked away from the deal but did nothing to bust the offending web site. His lawyer advised that because he signed a non-disclosure agreement with the crooks my friend might be legally liable if he turned them in to the authorities. It is his intention, though, to bust them just as soon as the NDA expires… in three years. - I thought the existence of whistleblower laws was exactly to allow for people to report things in situations like this. That is, if the article is accurate.

I think it's more likely that the story has been exaggerated in retelling several times, and "we can't reveal this for NDA purposes" is just a way for the author to not have to give any proof of any of the claims.

I'm a lawyer with just a tiny bit of experience with whistleblower issues. The part of the story where a whistleblower decides not to go public after consulting with their lawyer strikes me as totally plausible. You could think of being a whistleblower as kind of the career equivalent of firing a gun at someone who you're pretty sure is an armed intruder in your home. Yes, if you have the facts right you're probably entitled to do it and (if it will protect other people) it might well be the right thing to do. No, that doesn't mean your life won't get complicated for a while afterward -- especially if the facts aren't what you thought they were, or you miss.

I think whistleblowers are incredibly important to society, and there are often good laws to protect them. But they're doing something brave. By far the easiest and safest path is to just look the other way. Or leak it to the media ...

(Note I'm not saying this particular story is accurate of course.)

Possibly, but those people probably don't talk to reporters about exactly what was going on there.

I wouldn't be surprised if this story turned out to be far less interesting once you've heard what the company has to say.

It really could just be some misunderstanding of CPC/CPM/CPA or advertisers actually being fine with it (since they can just calculate their effective CPC). This stuff is confusing for industry folks. An investment banker probably isn't fully up to snuff on all the latest in internet ads (few people are).

It also wouldn't be surprising if this friend turned out to be a disgruntled would-be banker for the company. Companies often interview multiple investment banks before choosing one, he might be bitter over losing the deal.

Agreed. If this was a direct sale with a media company, I doubt the advertiser was even paying on a CPC basis. They were likely paying on a CPM basis and tracking everything that happened with their ads using their own buy-side ad server.

On the flip side, there definitely are companies out there that do screw their advertisers over. I work for one that doesn't, but I hear plenty about others..

> His lawyer advised that because he signed a non-disclosure agreement with the crooks my friend might be legally liable if he turned them in to the authorities.

I'd be astonished if US law allows a contract between two people to protect a criminal from being reported to law enforcement.

US (and most other nation's) law specifically nullifies either any clause or the entirety of any contract that is found to reference illegal behavior.

In addition, there are also whistleblower statutes, to further protect in such situations.

True. Now enjoy spending thousands of dollars making your case in court.

Click fraud is not a crime in the U.S. It may be a breach of the site/service's contract with its advertisers, but it is not a crime.

Whistleblowing laws only protect reporting crimes or regulatory violations. Ergo, they would not apply in this case.

For this reason, NDAs are permissible. Note that if the friend was actually working for an advertiser, the NDA would be limited (but would stilly generally apply), because the aforementioned breach of contract would empower the advertiser to sue.

US Fraud statutes are VERY broadly written. In this case, each time they knowingly dropped an inflated bill in the mail, that was a new count of mail fraud. If they emailed the bills, it was wire fraud.

More traditional click fraud, where the the clicks are inflated with bots or even other humans at the direction of the person benefiting from them would fall under the wire fraud statutes, assuming that somewhere in the contract between the parties it states that you will not take any action to inflate your clicks. The breach of that contract becomes criminally fraudulent because they are paying you based upon a misrepresentation by you - namely that you have stated that you won't do such things.

If the Reddit community catches onto this post and gets their private eye caps on, I give it two days maximum before they work out the company behind the advertising fraud and they're outed. So many clues in this post, only a matter of time. How many major media companies in the low nine figures, private are looking to sell based in the USA?

Dozens, possibly hundreds. There are at least 6 of them in Santa Monica , 3 more in West LA, about a dozen in Hollywood. And those are just the ones I know about because they work with area startups.

LA isn't even a major player in the advertising industry (either on the advertiser or ad serving sides)--SF/SV and NY/NJ are the major hubs.

Cringely doesn't identify the culprit, but there's probably enough information here that we could do a crowdsourced deduction. We know that it is:

- a "prominent web media company"

- a major advertiser on the web

- private, not public

- looking to be acquired

- valued in the "low nine figures", so about $100-300M

- probably in the USA (since the tip is from an old friend of Cringely--an American--who works in private equity deals)

I'll get us started with a possible short list. This is a merged list of Google searches for "top media companies", "top web advertisers", and similar terms. I eliminated companies like Google and Sony that I know to be public or that are obviously too big to fit the clues. The next step is to prune the list according to revenue estimates that would imply a market value of $100-300M, those that are private, etc. Can anyone find way to do this?

  Activision Blizzard
  AdJug
  Adconion Media Group
  Adknowledge
  Advance Publications
  Aerelink
  Affect Labs
  AlwaysOn
  Anarkik3D
  Ancestry.com
  Anthropics Technology
  Ariel Communications
  Aroxo
  Artesian Solutions
  AudioBoo
  BView
  BeatThatQuote.com
  Broadbean Technology
  CareerBuilder
  Celona Technologies
  Clash Media
  Classified Ventures
  Codilink UK
  Comufy (Chootta)
  Cox Enterprises
  CyberSports
  Datmedia
  Demand Media
  Demotix
  Digital Goldfish
  Dopplr
  Electronic Arts
  Entanet International
  Eutechnyx
  Everyclick
  FriendFinder Networks
  Frontier Silicon
  GameStop
  GetJar
  Golden Gekko
  Groupon
  Handmade Mobile Entertainment
  Hubdub
  Huddle
  Hulu
  IVCMedia
  Introversion Software
  KeyPoint Technologies
  Light Blue Optics
  Livebookings Holdings
  Loc8 Solutions
  Madgex
  McClatchy
  Medio Systems
  MeetingZone
  Mendeley
  Mimecast
  Mind Candy
  Mippin
  MirriAd
  Mixcloud
  Mobango
  Mobile Commerce
  Mobiqa
  Monster Worldwide
  Moo Print
  Music Glue
  Mydeo
  NX Vision
  Nativ
  NearGlobal
  New Concept Gaming
  OnRelay
  PacketExchange
  PharmiWeb Solutions
  Pixsta
  Playfish
  Quick.tv
  QuinStreet
  ReachLocal
  Real Time Content
  Saffron Digital
  ScanSafe
  Scene Systems
  SeatWave
  Secerno
  Sharpcards
  Shazam Entertainment
  Skimbit
  Slicethepie
  Slingshot
  Songkick.com
  SoundCloud
  Splash Damage
  Spotify
  Struq
  Supajam
  SuperMedia
  The Cloud
  The Hut
  Tribune
  Triopsis
  Truphone
  Tweetmeme
  UMU
  United Online
  Upad
  ValueClick
  Viagogo
  Vpar
  We7
  WebMD
  Webjam
  Wesupply
  WikiJob
  Yell Group
  Zemanta
  Zynga
  eHarmony
  iDesktop.tv
  iplato Healthcare
  mydeco.com

Add: Sells their own Ads, and invoices advertisers directly. That's going to certainly limit the possibilities as well.

"This can only happen for sites that sell their own ads but this particular site was just sending invoices to advertisers"

His lawyer advised that because he signed a non-disclosure agreement with the crooks my friend might be legally liable if he turned them in to the authorities

What does the lawyer have to say about the friend talking to Cringely?

And advertisers often lean into it by often preferring not to know precisely how effective are their ads.

That has not been my experience at all.

That's precisely why I call BS on this story. Anyone with a Google Analytics account would be able to look at the huge disparity between billed clicks and the clicks to their own site. Even if they were billed based on impressions (CPM), which could muddy the waters somewhat, surely someone would notice that their net CPC with this network is 10X that of their CPC on other networks.

Media buyers are mostly wise to this old scam by now.

First, you can simply measure the inbound traffic on the custom landing page for each ad buy, and it should be comparable to number of clicks reported.

Second, cost per click traffic is so cheap these days media buyers tolerate a lot of spillage, and complaining about excess spillage is answered immediately with deep discounts on CPC in order to keep the ad buyers happy.

Third, if the ad campaign isn't delivering ROI then media buyers stop buying ads from the property, the property bleeds ad buyers and gradually the problem solves itself.

Sounds to me like the company looking to be bought pumped up the stats presented to its suitors, and perhaps they do report these inflated stats to ad buyers as well, and then they probably give each ad buyer a deep discount on CPC so they won't complain about the gap between clicks reported compared to inbound traffic.

Interesting comments. Like in so many other instances where an article criticises, explicitly or implicitly, the way some nerds make money, the reaction is to downplay it.

There's nothing really shocking here. As Cringley pointed out in an earlier blog post, it's common for publishers to overcharge for advertising. This was true long before the web existed.

But the thing that's different is nerds have the power to change the way things are done. Everyone knows how annoying (and generally ineffective) ads are. The question is, are you going to make the situation better, or worse?

Steve Jobs actually sought and was granted a patent on "serving ads upon booting". No internet required. Sad, really.

There is a possibility of the advertisers getting rebates or unrecorded discounts after they pay the large-amount invoices. This can exaggerate the income figure for the publisher, and possibly help the advertisers to cut taxes as well.

It's illegal, of course. But I guess they are doing exactly like this.

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