Senators ask feds to look at digital ad fraud

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A pair of Democratic senators want a federal agency to take a look at fraudulent traffic to digital ads served up by platforms like Google and Facebook.

Scammers can use software to generate artificial clicks on websites that pay for the traffic, or they can simply set up their own ad-laden websites and drive traffic there to reap the financial benefits.

{mosads}This inflates the price of online ads, which rise and fall based on changes in demand. A 2015 industry study cited by the lawmakers estimated that advertisers would lose more than $7 billion to this kind of activity this year.

Sens. Charles Schumer (D-N.Y.) and Mark Warner (D-Va.) in a letter on Monday asked the Federal Trade Commission (FTC) to examine these types of schemes.

“The cost of pervasive fraud in the digital advertising space will ultimately be paid by the American consumer in the form of higher prices for goods and services,” they wrote to Chairwoman Edith Ramirez. “Just as federal regulation has evolved to keep pace with the ever-growing sophistication of our financial markets, so must oversight of the digital advertising space.”

The online advertising world is a byzantine system of technology companies — some very well-known, some obscure — that play different roles in delivering and targeting ads to consumers. It is big business: ads bring in the majority of revenue at both Google and Facebook.

The senators posed six questions to the FTC about the issue, including asking about the FTC’s current activities in the field.

Many internet companies have moved to combat fraud themselves, but the senators raised the prospect in their letter that action from the private sector might not be enough.

“While these developments are significant, it remains to be seen whether voluntary, market-based oversight is sufficient to protect consumers and advertisers from digital advertising fraud,” they said.

A spokesperson for Google declined to comment on the letter, and another for Facebook did not respond to a request for comment.

Dave Grimaldi, the executive vice president of public policy for trade group the Interactive Advertising Bureau, said that the organization shared the lawmakers’ concerns and said the industry was committed to fighting ad fraud.

“We would welcome the opportunity to share with Senators Warner and Schumer, as well at the FTC the work we are doing to improve the health of the advertising and marketing supply chain,” he said in a statement.


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