Ad Fraud: What It Is, How It Works, & 13 Common Types

What Is Ad Fraud?

Ad fraud occurs when bad actors manipulate digital advertising metrics, inflating clicks, impressions, or conversions to siphon ad spend from businesses. Fraudsters use bots, fake websites, and deceptive tactics to generate fraudulent traffic, deceiving advertisers into believing their campaigns are performing better than they are.

With advertisers projected to spend over half a trillion dollars on digital ads, fraudsters are aggressively exploiting weaknesses in online advertising systems. They spoof high-value websites, use automated bots to mimic real users, and create fake interactions, ultimately draining ad budgets without delivering real value.

To combat ad fraud, businesses need a clear understanding of what normal visitor behavior looks like. By monitoring traffic patterns and implementing real-time fraud detection, advertisers can identify anomalies and prevent fake clicks from eating into their ad spend.

Understanding Ad Fraud

Scammers deceive advertising platforms with fraudulent clicks, impressions, and data events, preventing ads from reaching real visitors. This not only wastes ad budgets but also erodes brand reputation. Because fraudulent activity doesn’t come from real users, it falls under invalid traffic (IVT), which includes:

• General Invalid Traffic (GIVT): Easily identified through standard checks, such as IP blacklists and automated filtering.
• Sophisticated Invalid Traffic (SIVT): Requires advanced analytics, cross-platform collaboration, and human intervention to detect.

Common Ad Fraud Methods

Click Fraud

Click fraud occurs when fraudsters artificially inflate the number of clicks on an ad to generate revenue for publishers or to deplete a competitor’s ad budget.

How It Works:

• Automated bots, scripts, or even click farms (real people paid to click ads) generate fake clicks.
• Pay-per-click (PPC) advertisers waste money on non-existent engagement.
• Fraudsters collect ad revenue from advertisers without delivering real visitors.

Example: A competitor clicks repeatedly on a company’s PPC ad to exhaust their budget early in the day, reducing their visibility.

Cookie Stuffing

This tactic involves injecting unauthorized cookies into a visitor’s browser to manipulate ad attribution and commissions.

How It Works:

• A fraudster places hidden cookies on a visitor’s browser.
• If the visitor makes a purchase later, the fraudster falsely claims credit for the referral.
• Advertisers pay commissions for conversions that didn’t come from a legitimate source.

Example:

A fraudulent affiliate marketer stuffs cookies from multiple brands onto a visitor’s browser, falsely claiming commission for any future purchases.

Domain Spoofing

Fraudsters disguise low-quality or fake websites to appear as premium, high-value domains. This tricks advertisers into paying higher rates for ad placements that never reach the expected audience.

How It Works:

• A fraudster creates a fake website and manipulates data to make it look like a premium domain.
• Advertisers bid for ad placements, thinking their ads will appear on reputable sites.
• In reality, the ads are displayed on low-quality or completely fake sites, draining budgets with no real engagement.

Example: An ad buyer thinks their campaign is running on a major news website, but it’s actually being shown on a fraudulent site filled with bots.

Click Injection

Click injection is an advanced form of click fraud that allows fraudsters to claim credit for app installs they didn’t generate.

How It Works:

• Fraudsters use malware-infected apps to detect when a user is about to install a new app.
• The fraudulent app fires a last-minute click, making it look like the install came from the fraudster’s ad.
• The fraudster gets paid for the install, even though they had no real influence over it.

Example: A mobile user downloads a fitness app. Meanwhile, a malicious app running in the background injects a fake click, tricking advertisers into crediting the fraudster with the install.

Pixel Stuffing

In pixel stuffing, multiple ads are hidden within a single, tiny pixel that is invisible to human users, yet counted as an impression.

How It Works:

• Fraudsters embed multiple ads into a single pixel on a webpage.
• Advertisers are charged for impressions even though visitors can’t see the ads.
• Bots may simulate engagement, further deceiving advertisers.

Example: A website claims to serve thousands of impressions per day, but all the ads are crammed into invisible 1x1-pixel areas, making them useless.

Ad Stacking

Fraudsters layer multiple ads on top of each other in a single ad slot, so only one ad is visible but all are counted as impressions.

How It Works:

• Multiple ads are placed in a single ad space.
• Users see only the top ad, but impressions and clicks register for all stacked ads.
• Advertisers pay for hidden ads that don’t reach their audience.

Example: A mobile game app loads five ads in one placement, but only the top ad is visible while advertisers for the other four still pay for the impression.

Ad Injection

Ad injection manipulates web pages by inserting or replacing ads without the website owner’s consent.

How It Works:

• Fraudsters inject unauthorized ads into web pages.
• This often occurs through browser extensions, malware, or compromised ad networks.
• Legitimate publishers lose revenue as fraudsters hijack their ad space.

Example: A user visits a major retailer’s website, but instead of seeing the retailer’s ads, injected ads from fraudsters appear, diverting traffic to competitors or scams.

Geo Masking

Geo masking misrepresents a visitor’s location to manipulate ad targeting.

How It Works:

• Fraudsters use proxies or VPNs to make traffic appear as though it’s coming from premium locations.
• Advertisers pay higher rates for geo-targeted impressions, but the actual audience is outside the intended region.

Example: An U.S.-based company runs a campaign targeting American consumers, but fraudsters route traffic from low-cost regions, making it look like U.S. traffic.

Bot Traffic

Bots are automated scripts designed to mimic human behavior and generate fake impressions, clicks, and conversions.

How It Works:

• Fraudsters deploy bot networks (botnets) to visit websites and interact with ads.
• Bots artificially inflate engagement metrics, tricking advertisers into spending more.

Example: A fashion brand sees a spike in traffic on their latest ad campaign, but all engagement comes from bot traffic, leading to zero actual conversions.

User Agent Spoofing

Fraudsters manipulate browser or device headers to disguise bot activity and evade detection.

How It Works:

• Fake user agents make bots appear as legitimate visitors.
• This allows fraudsters to bypass ad fraud detection filters.

Example: A bot pretends to be a visitor using an iPhone to interact with a mobile ad, tricking advertisers into thinking they reached their target audience.

SDK Spoofing

SDK spoofing occurs when fraudsters manipulate mobile analytics to generate fake app installs.

How It Works:

• Fraudsters intercept and replay in-app events to make it look like real installs and user interactions occurred.
• Advertisers pay for installs that never happened

Example: An advertiser pays for 10,000 app installs, but a fraudster uses SDK spoofing to fake these installs, wasting the ad budget.

Install Farms

Fraudsters use real devices or emulators to fake app installs and earn money from install-based campaigns.

How It Works:

• Fraudsters operate “install farms” where real people or automated scripts repeatedly install and uninstall apps.
• The fraudster collects ad revenue from fake installs.

Example: A company running a CPI (Cost Per Install) campaign pays fraudsters who manually install and uninstall apps to generate fake installs.

Forced Redirects

Fraudsters use malicious ads to force users onto unwanted websites, often leading to scams or malware infections.

How It Works:

• A user clicks on a legitimate ad but is redirected to a fraudulent website.
• These ads are often loaded with malware that can steal personal data.

Example: A visitor clicks on a travel ad expecting a flight deal but is redirected to a phishing site trying to steal their credit card information.

Who Is at Risk?

Ad fraud affects any business using digital advertising, but fraudsters often target high-value industries, including:

• Retail & E-Commerce
• Financial Services
• Legal

However, any company bidding on competitive keywords is at risk, making fraud prevention a necessity for all advertisers.

How to Prevent Ad Fraud

Preventing ad fraud requires proactive monitoring, strong partnerships, and robust detection solutions. Here are some key steps advertisers can take:

Research Ad Networks

Choose transparent ad networks with fraud detection measures in place. Look for partners that actively monitor and prevent fraudulent activity.

Monitor Traffic Patterns

Establish a baseline for normal visitor behavior and watch for anomalies such as:

• Sudden spikes in traffic.
• Unusually high click-through rates (CTR).
• Traffic from unexpected geographic regions.

Analyze Conversion Rates

A mismatch between high traffic and low conversions can signal fraud. In mobile advertising, unusual click-to-install times may indicate click spam or install hijacking.

Use Precise Targeting

Refine targeting settings to focus on specific demographics, making it easier to spot fraudulent activity.

Implement Ads.txt & Sellers.json

Ensure only authorized resellers can trade your ad inventory by maintaining an updated ads.txt file and verifying sellers.json credentials.

Track Competitor Activity

Set up alerts for duplicate content and monitor for click fraud tactics used by competitors.

Monitor Website Performance

Bot traffic can slow down websites and increase hosting costs. Watch for unusual bandwidth spikes and service interruptions.

Detect Spoofed Domains

Fraudsters often create lookalike domains to trick advertisers. Regularly search for misspelled or slightly altered versions of your URL.

Collect Behavioral Data

Use client-side signals such as:

• Touch and typing patterns.
• Browser and device fingerprints.
• Sensor and movement data.

Review Signature Signals

Analyze HTTP, TLS, and mobile fingerprints to differentiate bots from humans.

Conduct Manual Testing

Periodically browse your own website and ad placements to identify suspicious activity, such as ad injections or forced redirects.

Stay Updated on Ad Fraud Trends

Fraud tactics evolve rapidly. Follow industry reports and organizations to stay informed about the latest threats.

Block Malicious IPs

Identify and blacklist risky IP addresses to prevent repeated fraud attempts.

Use AI-Driven Fraud Detection

A dedicated bot management system can analyze traffic in real-time, automatically blocking fraudulent activity.

Deploy Anti-Malvertising Software

Detect and block malicious ad injections with real-time monitoring tools.

The Bottom Line

Ad fraud is a persistent and costly challenge for digital advertisers. Fraudsters continuously adapt their tactics, making it crucial for businesses to stay vigilant. By leveraging fraud detection tools, monitoring traffic patterns, and working with transparent ad partners, advertisers can protect their budgets and ensure their ads reach real audiences.