What is Click Fraud? How It Works & How to Prevent It

How Does Click Fraud Work?

Click fraud happens when ads receive fake, non-genuine clicks designed to drain budgets, manipulate ad performance, or generate illegitimate revenue. These clicks may look real, but they don’t come from potential customers—they come from fraudsters, bots, and bad actors with malicious intent.

To execute click fraud, perpetrators use automated scripts, large-scale human networks, or even unethical competitors. Some fraudsters set up entire operations to flood ads with invalid clicks, while others use sophisticated techniques to mimic human behavior and bypass detection.

One of the biggest challenges? Click fraud is constantly evolving. Fraudsters hide behind proxies, VPNs, and IP spoofing, making it harder to track them down. Some advanced bots even engage with multiple elements on a page—scrolling, hovering, and clicking—before interacting with an ad, making them look like real users.

Victims of click fraud, businesses waste money on fake engagement, lose valuable ad placements, and struggle to trust their campaign data. And as long as digital advertising remains lucrative, click fraud isn’t going anywhere.

The Different Types of Click Fraud

Click fraud comes in many forms, each with its own methods and motivations. While some fraudsters act out of direct competition, others exploit ad networks for financial gain. Here’s a comprehensive breakdown of the most common types of click fraud and how they work.

1. Competitor Click Fraud

Who’s behind it? Your competitors.
Why do they do it? To drain your ad budget and push you out of the market.

‍Competitor click fraud happens when businesses or individuals intentionally click on a rival’s ads to exhaust their daily budget. Once the budget runs out, the ad stops showing—giving the competitor an advantage.

2. Publisher Click Fraud

• Some publishers set up fake websites with automated traffic to maximize their ad earnings while providing zero value to advertisers.
• Google and other ad networks try to fight this with invalid traffic detection, but fraudsters continually adapt, making it an ongoing battle.

3. Bot Traffic and Automated Click Fraud

Who’s behind it? Cybercriminals, fraud rings, and malicious actors.
Why do they do it? To manipulate digital advertising at scale.

Bots play a massive role in modern click fraud. Sophisticated scripts and automated programs can generate thousands or even millions of fake clicks, all without human interaction.

Some of the most common types include:

• Simple bots: Basic scripts that click on ads repeatedly from different IPs.
• Botnets: Networks of infected computers controlled remotely to carry out fraudulent activity undetected.
• Advanced bots: These mimic human behavior, scrolling, clicking different elements, and even interacting with websites to avoid detection

Bot-driven fraud accounts for the largest share of invalid traffic, making it one of the most damaging types of click fraud for advertisers.

4. Accidental Clicks

Who’s behind it? Regular users.
Why does it happen? Poor ad placement, deceptive design, or unintentional interactions.

Not all click fraud is malicious—accidental clicks also contribute to wasted ad spend. These occur when:

• Ads are placed too close to navigational buttons or other interactive elements.
• Interstitial or pop-up ads are difficult to close without clicking them.
• Mobile users unintentionally tap on ads due to small screen sizes.

While platforms like Google Ads attempt to filter out accidental clicks, many still count as legitimate interactions, reducing an advertiser’s ROI.

Which Industries Are Most Affected by Click Fraud?

Click fraud disproportionately impacts industries where high competition and high CPC are prevalent. These industries often rely heavily on paid advertising to drive traffic, leads, and sales, making them prime targets for fraudulent activity. 

The sectors most affected by click fraud include:

1. E-commerce

E-commerce businesses frequently compete for top ad placements on high-value keywords like product names, brands, and categories. With high CPCs and fierce competition, competitors may engage in click fraud to drain budgets or sabotage campaigns.

In this industry, fraudulent clicks can lead to wasted ad spend, reduced ROI, and skewed campaign data, making it harder to optimize performance.

2. Finance and Insurance

This sector is especially targeted because keywords related to loans, insurance, credit cards, and financial services are extremely expensive. Fraudsters target these industries to exhaust ad budgets quickly. And, unfortunately, high CPCs mean even a small amount of click fraud can result in significant financial losses.

3. Legal Services

Law firms often bid on competitive keywords like “personal injury lawyer” or “divorce attorney,” which can cost hundreds of dollars per click. Competitors or bots may click on these ads to deplete budgets. Click fraud leads to wasted ad spend and reduced lead generation, which directly affects legal services companies' revenue.

4. Travel and Hospitality

Travel-related keywords (e.g., “cheap flights,” “hotel deals”) are highly competitive and expensive. Competitors or malicious actors may use click fraud to disrupt campaigns and drain budgets, especially during the highly competitive peak travel seasons.

5. Healthcare and Pharmaceuticals

This is another example of a sector with high competition and high CPCs. Keywords related to medical treatments, prescriptions, and healthcare services are costly and highly competitive. Click fraud can lead to wasted budgets and fewer genuine leads, affecting patient acquisition and revenue for doctors and other professionals, clinics, and hospitals relying on PPC ads.

6. Real Estate

Real estate agents and companies often bid on location-based keywords (e.g., “homes for sale in [city]”), which are expensive and competitive. Fraudulent clicks can drain budgets and reduce the effectiveness of lead generation campaigns.

7. Technology and Software

Tech companies frequently bid on high-value keywords related to software, apps, and IT services. Competitors may use click fraud to disrupt campaigns. The consequences of these malicious acts are wasted budgets and reduced ROI on ad spend.

Real Examples of Click Fraud

Click fraud is a pervasive issue that affects businesses of all sizes, from small startups to industry giants. Below are real-world examples that highlight how fraudsters manipulate PPC campaigns and the devastating impact they can have on businesses.

Uber’s $100 Million Click Fraud Scandal

Uber lost over $100 million to a sophisticated click fraud scheme. This story was shared by Kevin Frisch, Uber’s former head of performance marketing and CRM, on the Marketing Today podcast.

During a routine review of their ad performance, Uber made a shocking discovery: Even after cutting their ad budget by $100 million, the number of app installs remained virtually unchanged. This inconsistency prompted a deeper investigation, which uncovered a scheme known as attribution fraud. 

Essentially, Uber was being charged for app installs that happened organically, not through paid ads. The ad network had manipulated the data to make it appear as if the installs were driven by their campaigns.

This case sheds light on how attribution fraud operates. Since the data often looks legitimate, it can go unnoticed without thorough analysis. Businesses must carefully monitor their click, conversion, and acquisition metrics to spot discrepancies and protect their ad budgets from such scams.

Forbes and the MFA Subdomain Scandal

A report from Adalytics, an ad quality firm, revealed in April 2024 that Forbes systematically misled advertisers into believing they were buying media on Forbes.com when they were actually purchasing ad space on a secret, spammy ‘made for advertising’ (MFA) subdomain. Forbes shut down the subdomain following inquiries from The Wall Street Journal.

The www3.forbes.com subdomain repurposed Forbes articles into low-quality formats like listicles and slideshows, bombarding readers with over 200 ads per page view—far more than the 3–10 ads typically seen on the main Forbes site. The subdomain didn’t have subscription paywalls and wasn’t indexed by search engines, making it inaccessible via organic search.

Roughly 70% of traffic to the subdomain came from clickbait ads placed by content recommendation services like Outbrain and Taboola. Hundreds of major brands, including Microsoft, Disney, JPMorgan Chase, Johnson & Johnson, Mercedes Benz, and Ford, unknowingly bought ad space on the subdomain, believing they were purchasing premium inventory on Forbes.com. One major consumer health brand discovered that 28% of their impressions thought to be on Forbes.com were actually served on the subdomain.

Forbes relied on ad verification firms for its primary site. However, these tools weren’t used on the subdomain, allowing Forbes to obscure the low-quality inventory from advertisers. 

Forbes defended its credibility, stating that the subdomain represented only 1% of its overall user base and was developed as an alternative way to consume existing content. However, the company chose to shut down the subdomain to “eliminate any potential confusion.” Forbes also blamed Media.net, its adtech partner, for misleading advertisers by incorrectly declaring the subdomain as Forbes.com.

How Click Fraud Has Evolved in 2024 & What’s Next

Click fraud became even more sophisticated in 2024, with fraudsters leveraging advanced technologies like AI and machine learning to bypass traditional detection methods. As advertisers invest more in digital advertising, fraudsters are finding new ways to exploit vulnerabilities in PPC campaigns. Here’s a look at the latest trends in click fraud:

• AI-Powered Bots: Fraudsters are now using AI to create bots that mimic human behavior more convincingly. These bots can simulate mouse movements, scrolling, and even random pauses, making them harder to detect.
• Attribution Fraud 2.0: Fraudsters have refined attribution fraud techniques, using AI to manipulate data and make fraudulent clicks appear legitimate. For example, they can now simulate multi-touch attribution paths to deceive advertisers into believing their ads drove conversions.
• Geo-Targeting Exploits: Fraudsters are targeting high-CPC regions with greater precision, using AI to identify and exploit geographic vulnerabilities in ad campaigns.
• Deepfake Clicks: Fraudsters are experimenting with deepfake technology to create fake user profiles and simulate clicks from seemingly real users.
• Ad Stacking: This technique involves stacking multiple ads on top of each other in a single ad slot. Fraudsters earn revenue from each stacked ad, even though only the top ad is visible to users
• MFA Site Proliferation: Made-for-advertising (MFA) sites have become more sophisticated, using AI to generate low-quality content at scale and attract fraudulent clicks.

The Role of AI in Fighting Click Fraud

While fraudsters are using AI to their advantage, advertisers are also leveraging AI to fight back. Here’s how:

• Real-Time Detection: AI-powered tools like ClickGUARD can analyze click patterns in real-time, identifying and blocking fraudulent activity before it impacts ad budgets.
• Behavioral Analysis: Advanced algorithms can detect anomalies in user behavior, such as unusual click rates or inconsistent browsing patterns, to flag potential fraud.
• Predictive Analytics: AI can predict future fraud trends by analyzing historical data, helping advertisers stay one step ahead of fraudsters.

How to Prevent Click Fraud

Click fraud is a persistent threat, but you don’t have to accept it as a cost of doing business. By implementing the right strategies, you can significantly reduce fraudulent clicks and protect your ad budget. Google offers some protection (you can check it on Google Ads Help Center), but they’re not always enough. That’s why you need to take an extra step. Here’s how:

Monitor Unusual Click Patterns

Click fraud often follows predictable patterns. Look out for:

• High Click-through Rates (CTR) with Low Conversions: If your ad gets tons of clicks but no sales or leads, fraud might be at play.
• Clicks from Unexpected Locations: If your business operates in the U.S., but your ads get clicks from countries you never targeted, that’s a red flag.
• Repeating IP Addresses: Multiple clicks from the same IP could indicate bots, click farms, or a competitor.

Most ad platforms, including Google Ads and Microsoft Ads, allow you to block suspicious IP addresses and exclude locations. If you identify regions with a high volume of fake clicks, you can:

• Manually exclude specific IPs associated with fraudulent activity.
• Block entire regions if they show a pattern of invalid clicks.

Adjust Your Bidding Strategy

Certain ad placements and bidding strategies are more vulnerable to click fraud.

Vulnerable Bidding Strategies:

• Maximize Clicks: This automated strategy prioritizes getting as many clicks as possible, making it an easy target for fraudulent traffic.
• Target Impression Share: This bidding method aims to show your ads as frequently as possible, which can expose them to fraudulent impressions and clicks.
• Broad Match Keywords: These attract large volumes of traffic, including low-quality clicks from bots and click farms.

What to do instead? Opt for manual bidding or Target CPA/ROAS, which prioritize conversions rather than just clicks. Use phrase or exact match keywords to attract more relevant traffic.

Vulnerable Ad Placements:

• Display Network & Discovery Ads: These placements appear on a wide range of third-party websites, where publishers can generate fraudulent clicks to inflate their revenue.
• App Ads: Many mobile apps generate accidental or fraudulent clicks due to poor ad placement (e.g., banners too close to interactive buttons).
• Low-Quality Websites: Ads shown on low-authority, ad-heavy sites are more likely to be exploited by fraudsters using bot traffic.

What to do instead? Limit your exposure on the Google Display Network (GDN) and exclude low-quality placements. In Google Ads, you can use placement exclusions to block suspicious websites and app categories.

Set Up Click Thresholds

If you notice a particular user, IP, or region repeatedly clicking your ads, you can set click limits to reduce excessive spending. Some ways to do this include:

• Frequency Capping: Limits how often a user sees or clicks your ad.
• Session-based Tracking: Identifies multiple clicks from the same session to filter out suspicious behavior.

Enable Click Fraud Protection Tools

Third-party click fraud prevention software can detect and block fraudulent activity in real time. These tools:

• Analyze traffic behavior to identify suspicious clicks.
• Automatically block fraudulent IPs before they drain your budget.
• Provide detailed fraud reports, helping you optimize future campaigns.

And we have an excellent suggestion for you!

How to Protect Yourself from Click Fraud with ClickGUARD

As click fraud evolves, so does click fraud protection. ClickGUARD offers a unique, cutting-edge solution to protect your ad spend from fraudulent clicks. Unlike other tools that make decisions without transparency, ClickGUARD provides deep insights into how fraud is impacting your campaigns. Our platform offers detailed reports that allow you to see exactly where fraudulent activity is coming from and understand the patterns behind it. With its advanced system, ClickGUARD continuously monitors your campaigns, analyzes traffic patterns, and automatically identifies suspicious activity, ensuring you only pay for legitimate clicks.

ClickGUARD's approach to click fraud protection involves multiple layers of defense. It tracks a variety of signals, such as click behavior, location data, and IP address anomalies, to detect fraud in real-time. By leveraging IP blocking, VPN detection, and sophisticated algorithms, ClickGUARD ensures fraudsters cannot manipulate your campaign data.

You can also choose to use ClickGUARD’s automated protection or take control with custom rules that tailor the protection to your business or industry needs. This flexibility ensures your campaigns are shielded according to your specific requirements, maximizing your ROI.