DCB Fraud 101
Explore how fraud impacts the mobile payments ecosystem
In recent years, direct carrier billing has established itself as a popular alternative payment method and the volume of transactions using this payment option is soaring.
However, growth in direct carrier billing (DCB) transactions has inevitably attracted the attention of fraudsters and cybercriminals looking to exploit vulnerabilities for their own gain.
To ensure that legitimate players in the mobile payments ecosystem can protect their DCB business, it’s vital to understand the fraud landscape. Below we provide a fraud 101 including solutions and best practices to protect your customers and DCB revenue streams.
AD FRAUD (FAKE CLICKS)
What?
Target
Motive
What?
Ad fraud (fake clicks) is a practice that artificially generates or inflates the number of clicks on online advertisements, misleading advertisers and wasting their advertising budgets.
Target
Advertisers: advertisers are one of the primary victims of this type of fraud. They invest substantial amounts of money in digital advertising campaigns with the expectation of reaching real users and achieving their marketing objectives. However, fake clicks distort the performance metrics, leading to wasted ad spend, inaccurate data insights, and reduced ROI.
Media agencies and publishers: when fraudulent clicks are generated, media agencies may unknowingly pay publishers for illegitimate engagements. This can damage the reputation of the agency and erode trust with advertisers, potentially leading to financial losses and a negative impact on their business.
App developers: in the case of click injection fraud, app developers whose apps are targeted by fraudulent click injections can become victims. Their legitimate installations and attributions may be hijacked by fraudsters, resulting in inaccurate performance metrics, skewed user acquisition data, and potentially affecting their revenue opportunities and partnerships.
Consumers: although consumers may not be direct victims in terms of financial loss, they can experience negative consequences indirectly. Fake clicks can lead to a poor user experience, as they may be redirected to unwanted destinations, encounter malicious content, or have their personal data compromised by fraudulent apps or websites.
Motive
What are the motivations for this type of fraudulent activity?
Financial gain
Ad fraudsters aim to exploit the digital advertising ecosystem for financial gain. By generating fake clicks, they can inflate performance metrics, leading to higher payouts from ad networks, misleading advertisers into believing their campaigns are successful, or engaging in fraudulent practices like click spamming to drain ad budgets.
Misallocation of ad spend
By distorting performance metrics through fake clicks, fraudsters can cause advertisers to allocate their budgets inefficiently. Advertisers may end up investing in campaigns that appear to be performing well but are actually driven by fraudulent engagements, resulting in wasted ad spend and reduced return on investment (ROI).
Competitive advantage
Competitors may resort to ad fraud to undermine the success of their rivals. By artificially inflating click counts or engagement metrics, they can create an illusion of superior performance, potentially diverting advertisers’ attention and budgets away from legitimate competitors.
AD FRAUD (MANIPULATION)
What?
Target
Motive
What?
Ad fraud (consumer manipulation) is a practice that deliberately deceives and manipulates consumers through fraudulent advertising methods, leading to false perceptions, misguided purchasing decisions, and potential harm to individuals’ trust and financial well-being.
Target
Consumers: consumers are the primary victims of manipulation fraud. They may be deceived into subscribing to unwanted services, making unintended purchases, or providing sensitive information under false pretences. This can result in financial loss, compromised personal information, and a negative user experience.
Advertisers: advertisers who fall victim to manipulation fraud can suffer financial losses and damage to their brand reputation. They may pay for fraudulent ad clicks or engagements, waste their advertising budgets on ineffective campaigns, or have their brand associated with deceptive practices.
Legitimate publishers: manipulation fraud impacts legitimate publishers who maintain high ethical standards. When fraudulent or misleading ads are displayed on their platforms without their knowledge, it can damage their reputation, erode user trust, and potentially lead to loss of business opportunities.
Mobile carriers: In the case of DCB fraud, MNOs and carriers can be victims when fraudulent transactions occur on their billing systems. They may face financial losses from unauthorised charges or disputes initiated by affected consumers.
Industry reputation and trust: manipulation fraud has broader implications for the mVAS industry as a whole. It erodes trust, undermines the integrity of advertising metrics, and hampers the growth and adoption of legitimate services. This impacts the reputation of the industry as a whole and can result in increased scrutiny and regulation.
Motive
What are the motivations for this type of fraudulent activity?
Revenue generation
Perpetrators engage in manipulation fraud to generate illicit revenue. By tricking users into subscribing to services, making purchases, or clicking on misleading ads, fraudsters can earn commissions, revenue shares, or inflate performance metrics to increase their financial gains.
Manipulating ad performance
By creating misleading ads or landing pages, fraudsters aim to attract clicks, generate traffic, or increase ad impressions, to manipulate advertising performance metrics and for financial gain.
Competitive advantage
In some cases, manipulation fraud is driven by a desire to gain a competitive edge. Unscrupulous players may employ fraudulent tactics to divert traffic or customers from legitimate businesses, thereby undermining their competitors and gaining a larger market share.
PAYMENT FRAUD
What?
Target
Motive
What?
Payment fraud is a practice where a fraudster or cybercriminal attempts to intercept or illicit a transaction for their financial gain.
Target
Consumers: consumers are the primary victims of payment fraud. They may experience financial losses through unauthorized charges, fraudulent transactions, or subscription services they did not sign up for.
Mobile carriers: payment fraud can negatively impact MNOs and carriers. They may bear the responsibility of refunding customers for unauthorised charges or addressing customer complaints related to fraudulent transactions. It can also harm their reputation and erode consumer trust in their billing systems.
Content Service Providers (CSPs): content providers who offer digital services through the DCB and mVAS model can be affected by payment fraud. Fraudulent transactions can lead to revenue losses and damage their reputation if customers associate their services with fraudulent activities.
Legitimate service providers: legitimate service providers, including app developers, platform owners, and digital content providers, may face reputational damage if their brands are associated with fraudulent activities. They may also experience reduced consumer trust and engagement due to the prevalence of payment fraud.
Industry reputation and trust: payment fraud undermines the reputation and trustworthiness of the DCB and mVAS industry as a whole. It creates a negative perception among consumers, advertisers, and stakeholders, impacting the industry’s growth and sustainability. Regaining trust and combating fraud is essential for fostering a healthy and secure ecosystem.
Motive
What are the motivations for this type of fraudulent activity?
Financial gain
Perpetrators engage in payment fraud to illegally obtain funds, make unauthorised transactions, or generate illicit revenue through fraudulent activities.
Manipulating performance metrics
In some cases, fraudsters may manipulate payment transactions or engagement metrics to artificially inflate performance statistics, leading to financial gains or improved perceived performance.
SOLUTIONS AND BEST PRACTICES
Robust anti-fraud
solutions
Implement advanced fraud detection systems that leverage machine learning algorithms and real-time monitoring to identify patterns and anomalies associated with fraudulent activities. These systems can flag suspicious transactions, abnormal click patterns, or fraudulent installations, allowing for timely intervention.
User behaviour
analysis
Analyse user behaviour data to establish baseline patterns and identify deviations that may indicate fraudulent activities. By monitoring user interactions, transaction patterns, and engagement metrics, anomalies and suspicious behaviour can be detected and investigated.
Proactive monitoring
of ad campaigns
Monitoring of ad campaigns, clicks, performance and content to detect any unusual or suspicious activities. Implement approval processes for ad content to ensure compliance with advertising standards and prevent the dissemination of misleading or deceptive ads.
3rd party
consent verification
Deploy a consent management platform to record, log and store proof of user consent. These solutions demonstrate compliance and also can help quickly resolve enquires about unidentified charges on the customers bill.
Vendor &
partner due diligence
Conduct thorough assessments and due diligence of vendors, partners, and third-party service providers to ensure their credibility and security practices. Verify that they have robust fraud prevention measures in place to protect against potential risks, and that they don't have a record of non-compliant activities.
Compliance &
industry standards
Adhere to relevant industry standards, guidelines, and regulations to ensure your ad campaigns are compliant. Stay updated with evolving compliance requirements to ensure ethical business practices and consumer protection.
Transparent
terms & conditions
Ensure that T&Cs for services, subscriptions, and purchases are clearly communicated to users. Provide comprehensive information about costs, billing cycles, cancellation processes, and any potential third-party charges.
Collaboration
& information sharing
Foster collaboration within the industry to share information, insights, and best practices in fraud prevention. Establish partnerships with other players, industry associations, or fraud detection organisations to exchange knowledge, identify new fraud techniques, and develop proactive measures collectively.
Responsive
customer care
Establish a responsive and efficient customer care system to handle customer complaints and inquiries promptly. Provide clear channels for customers to report fraudulent activities, ensuring their concerns are taken seriously and resolved in a timely manner
End-user education
& awareness
Educate end-users about potential fraud risks, common scams, and best practices to protect themselves. Promote awareness of fraudulent activities and provide guidance on how to report suspicious behaviour.
We can help you manage risk and compliance, protect your brand and grow your business.
MCP is a leader in market intelligence, fraud prevention and regulatory risk management for
the mobile payments space, we’re trusted by brands across the entire mobile ecosystem.
MCP’s solutions protect revenue, protect your customers and protect your brand.
