The first ever trial for advertising fraud failed in the Federal Court of New York. Over 20 brands were cheated out of their digital ad dollars including: Nike, Disney, Procter & Gamble.
Despite great lengths of extradition from Amsterdam of a European citizen to be jailed and tried in the 2nd District Court of New York…the DOJ failed to obtain conviction of any of its felony counts surrounding Fabio Gasperini’s ad fraud ‘botnet’ case.
In a seven day long jury trial, a dozen+ witnesses from computer experts to ad industry veterans, to government experts failed to convince a jury of the felony charges (full details here) which would have resulted in 70 years of prison sentencing.
Instead, after two years of case preparation the only sentence given was a simple one year misdemeanor. The defendant churned up more wasted court time with an appeal (appellate court decision 17-2479 2d Cir. 2018 here)
“Ad fraud is not unusual at all…40% of programmatic display is fraudulent, and 51% of it is non-viewable, yet advertisers are changed for it,” said C3 Metrics advertising attribution measurement Chief Attribution Officer Jeff Greenfield. “In attribution measurement, a platform has to purify all that fraud before it’s measured and modeled. It doesn’t mean that fraud goes away, but fraud reveals itself in poor ROI plus other fraud controls.”
Ad fraud has been around for ages, but Docket# 16-CR-441 was the first time it went to trial. It may be the last time it goes to trial, because it’s a highly complex scheme. Ad fraud isn’t a criminal trial, which is far easier for the average American jury to understand.
It raises an interesting legal question: do the ad exchanges share in any culpability? If generally known ad fraud practices are happening, but not enough is done because of pressure to make revenue, are publishers legally culpable too?
The IAB SafeFrame initiative to roll-out viewability code (C3 Metrics open-sourced its viewability code to the initiative) seems be dead in the water. What’s the incentive for a publisher to place a piece of code on their site if their revenue drops?
U.S. law is often determined by legal precedent, and this is the first-ever advertising fraud case to be tried in the U.S. It paves the way for whether DOJ decides to extradite European, Russian, or Chinese ad fraud botnet citizens (if they can find them) with evidence beyond a reasonable doubt, or if DOJ will pursue easier to prove, criminal cases with US citizens.
Because of Sarbanes Oxley, CFO’s can now be sentenced to jail. Will CEO’s and their advertising supply chains be sentenced to jail?
Enter the newest issue for the auditing profession to tackle.