Here's the letter 2 US senators sent urging the FTC to clamp down on ad fraud

Chuck schumer mark warnerAlex Wong/Getty ImagesU.S. Sen. Charles Schumer (D-NY) (R) talks to Sen. Mark Warner (D-VA) (2nd R) during a hearing before Senate Banking, Housing and Urban Affairs Committee September 9, 2014 on Capitol Hill in Washington, DC.

US senators Mark Warner and Chuck Schumer sent a letter to the Federal Trade Commission’s chairwoman on Monday, urging her to take a look at the steps the consumer protection body can take to clamp down on digital advertising fraud.

As The Wall Street Journal first reported, the Democratic senators say in the letter that a failure to cut down on ad fraud will ultimately lead to consumers having to pay more for goods and services. 

(You can read the letter in full below.)

Ad fraud takes several forms. Ultimately it involves advertisers paying to reach an audience of humans but actually serving their ads to bots.

Internet bots siphon off billions of dollars a year from the ad industry. The bots create websites, usually with content lifted from legitimate publishers, then generate fake traffic through a net of infected computers.

Ad fraud is expected to become so rampant it will cost advertisers more than $50 billion in lost spend by 2025, according to the World Federation of Advertisers, which said last month the practice is “second only to the drugs trade” as a source of income for organised crime.

In the letter, senators Warner and Schumer spell out the economic cost of ad fraud to advertisers and explain that cost will eventually be picked up by consumers:

“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. 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.”

Warner and Schumer then lay out six questions for the FTC to respond to:

  1. Is the FTC observing a trend that favours one particular type of advertising fraud over another? If so, what factors are leading to the prevalence of that particular type of ad fraud?
  2. What is the projected economic impact of this degree of data and revenue leakage amongst media owners or publishers?
  3. What steps is the FTC taking to protect consumer data and mitigate fraud within the digital advertising industry? What regulatory agency currently provides oversight of the mobile advertising platforms?
  4. What steps can be taken to reform opaque advertising exchanges?
  5. What can be done to more closely align the incentives of ad tech companies with publishers, advertisers, and consumers?
  6. To the extend that criminal organisations are involved in perpetuating digital advertising fraud, how is the FTC coordinating with both law enforcement (e.g. The Department of Homeland Security or the Federal Bureau of Investigation) and the private sector to formulate an appropriate response?

Read the letter in full:

FTC – Digital Ad Fraud by MarkWarner on Scribd


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