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Spyware-Driven Ad Fraud Increasingly Widespread

A new survey names names and looks at the impact of spyware-driven advertising fraud on VistaPrint, a company that provides online graphics services to consumers and businesses.

Disreputable online advertising is alive and well, despite news that ad network Jellycloud, previously associated with spyware and adware when operating under the names Claria and Gator, is closing its doors.

In a report released Tuesday, spyware researcher, attorney, and Harvard assistant professor Benjamin Edelman examined the impact of spyware-driven advertising fraud on VistaPrint, a company that provides online graphics services to consumers and businesses.

"Although VistaPrint's [CEO] Robert Keane claims to effectively oversee VistaPrint's marketing practices, I emphatically disagree," Edelman explained. "To the contrary, I've seen ample evidence of VistaPrint promoted by spyware and adware programs that sneak onto users' computers without consent (including through security exploits) and through ruse and deception."

The issue, Edelman claimed, is that VistaPrint fails to police its marketing partners. "As a result, VistaPrint's advertising spending helps fund spyware and adware programs that sneak onto users' PCs, with serious harms to performance, reliability, and privacy," he said.

Edelman's report provides details of six specific instances in which VistaPrint's online marketing partners defrauded VistaPrint. They did so by, for example, claiming a commission for sending traffic to VistaPrint that they didn't send. Or they hijacked traffic to VistaPrint by routing it though a chain of marketing affiliates and then back to VistaPrint for a commission.

Among the companies Edelman cites for fraudulent traffic manipulation is Performics, a company that Google acquired when it bought DoubleClick and subsequently sold in August to Publicis Groupe.

Other advertising companies or affiliates singled out include Vomba, Hydra Network Affiliate 19934, Clickbooth Affiliate 14941, WhenU, MediaTraffic, Iadsdirect, Clickbooth Affiliate 7781, Revenue Gateway Affiliate 12489, CPA Empire, CPA Builder, Weclub, CX Digital Media Affiliate 13736, Deluxe Communications, Smartyseek, and Zango.

Edelman said that spyware-based advertising fraud affects most merchants who operate affiliate, cost-per-action, or other conversion-contingent programs.

"VistaPrint's marketing partners are defrauding VistaPrint by claiming commissions on sales they actually did nothing to cause," said Edelman. "Such commissions are entirely wasted, yielding no bona fide marketing benefit to VistaPrint."

The real losers here, Edelman said, are VistaPrint, its shareholders, and the public. "In 2008, VistaPrint marketing consumed 31.9% of revenue (more than $125 million) while profits were just 9.9% ($39.7 million)," said Edelman. "Meanwhile, fraud against VistaPrint also harms the general public: Consumers suffer unwanted installations of spyware programs funded, in part, by theft from VistaPrint."

VistaPrint did not respond to a request for comment.

Adware and spyware, far from being dead, as some would like to believe, are alive and "becoming increasingly widespread," Edelman concludes.

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