

Click fraud the old fashioned way - cantrevealname
http://www.cringely.com/2012/08/14/click-fraud-the-old-fashion-way/

======
powera
_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.

~~~
JackC
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.)

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

------
staunch
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.

~~~
corin_
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..

------
DanBC
> _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.

~~~
FireBeyond
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.

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

------
DigitalSea
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?

~~~
rprasad
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.

------
cantrevealname
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)

~~~
cantrevealname
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

------
mhb
_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?

------
eli
_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.

~~~
downandout
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.

------
snorkel
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.

------
ijobs-ly
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.

------
zhoutong
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.

