Fraud: current status and Analysis in the mobile app industry

The alarming figure of $5.4 billion in estimated global financial loss in 2022 may be due to three potential factors.
 

On the one hand, reduced budgets for marketing specialists for fraud protection. On the other hand, the release of iOS 14.5 diverted attention and resources away from fraud protection. And finally, the visibility of more fraud cases due to a record of reported events has raised the rate of fraud detected in the mobile app industry.

The current state of mobile app data fraud

• iOS app install fraud increased by 40% in the second half of 2022.
  
  
• Android app installs fraud increased by 46% in the same period.
  
  
• The global market faces an estimated financial loss of 5.5 billion due to fraud exposure related to installation.
  
  
• Finance, Travel, and Shopping applications are the verticals with the most frauds detected.
  
  
• Mexico and Vietnam are the frontrunners regarding fraud detection rates for Android, with 34% and 21%. In the realm of iOS, Vietnam (28%) and the UK (23%) take the lead positions on the list.
  
  
• Bots are behind 70% of global setup fraud. 

In the second half of 2022, there was a significant increase in fraud, reaching its record in November-December 2022. Looking at the January year-over-year data, Android saw a 31% increase, while iOS increased 76%. What was it due to? The indicator could be in the holiday period.

Game apps with a good score

Gaming apps are the least affected by fraud. The data shows:

• 6X higher install fraud among non-game apps compared to game apps.
  
  
• Game marketers are considered best in class for anti-fraud practices. Today they have become the "experienced" compared to other emerging applications.

Being pioneers in the past gives them this competitive advantage in the constant fight against mobile fraud.

Fraud represents a pervasive challenge that affects various industries. However, game marketers have been able to develop more effective buying strategies and shorter and more aggressive optimization cycles.

What lessons are game app marketers leaving behind?

Prioritize anti-fraud solutions and focus on higher quality KPIs to reduce fraud, especially on tight budgets. Scammers never rest.

The impact of mobile ad fraud knows no geographic borders fraud attacks can target any campaign in any country.

Fintech apps: the most affected

More than 50% of the total fraud exposure impacts the Finance category by $2.6 billion. This vulnerability arises from the convergence of elevated fraud rates within an emerging industry and an upward trajectory of the CPI.

The most bet for the fintech industry to go against fraud practices must be in the budget and not only in the tendency to acquire users who are evaluated later through Know Your Customer protocols. KYC entails the verification of user identities before granting access and utilization of application services: including validating personal information, such as names, addresses, telephone numbers, and potentially even biometric data.

Fraud, in other sectors, is also presented with data to pay attention to. The gambling and casino industry faces a challenging fraud exposure landscape, reaching $1.2 billion, driven by its CPI payments. 
Additionally, shopping apps are affected by twice the fraud exposure compared to gaming, with an estimated $406 million and $206 million, respectively.

In Shopping, iOS saw a 210% year-over-year increase, but the Android entertainment app fraud rate decreased in Jan-Feb 2023. Astonishing.

We talked to  Noelia Acosta, Agency Alliances Manager SP Latam at AppsFlyer, about the current situation of Fraud in mobile apps. Listen here.

Against post-attribution fraud

Post-attribution installation fraud refers to fraudulent activities detected after an app installation. It is important to note that a significant amount of the detected fraud comes from bots. They usually appear or become known after the attribution process. Fraudulent schemes utilizing fabricated users and devices are evolving within the performance market, aiming to avoid detection.

The main contributor to overall post-attribution fraud is non-gaming app activity.For this reason, it is essential to have tools that combat fraud effectively.

According to the article published by AppsFlyer, post-attribution fraud witnessed an uptick in Android non-games as in games (up 154% YoY overall when comparing Jan 2022 to 2023), defying the downward trajectory in iOS for both sectors.

Furthermore, Click Flooding and Fake Publisher fraud compete for dominance among the diversity of potentially fraudulent activities, showing near parity on Android devices meanwhile that Click Flooding takes the lead on iOS devices.

Finally, AppsFlyer points out Android devices are significantly easier to detect fraud, especially when the campaign is designed for the Google Play store.

The ever-evolving mobile app fraud is always looking for new tactics to operate. Therefore, it is essential to remain adaptable and be willing to adjust our strategies to anticipate them. Rocket Lab can help you grow your app safely and reliably.