Purchase Fraud

Introduction to Purchase Fraud

Purchase fraud in the mobile ecosystem refers to illegitimate in-app purchase events designed to defraud advertisers or developers. As mobile commerce grows exponentially—Statista projects mobile commerce to reach $728 B by 2025—this threat has become increasingly sophisticated, targeting the critical monetization moment when money changes hands within apps. Unlike traditional e-commerce fraud, mobile purchase fraud exploits the unique technical and behavioral patterns of app ecosystems.

What is Purchase Fraud?

Purchase fraud encompasses deceptive practices that manipulate in-app purchase systems for financial gain. Fraudsters typically target:

• Lifetime Value (LTV) campaigns where advertisers pay for high-value users
• Performance-based affiliate programs with purchase commissions
• Refund/chargeback loopholes in payment processing systems

Common Types of Purchase Fraud

1. Payment Method Fraud

• Stolen credit card purchases (ClearSale research shows 42 % of mobile fraud involves card testing)
• Disputed transactions after receiving digital goods
• Gift card or PayPal account takeovers

2. Technical Exploits

• SDK Spoofing: Faking purchase verification calls to app stores
• Receipt Cloning: Replicating valid transaction IDs
• Root/Jailbreak Bypasses: Modifying apps to disable payment checks

3. Attribution Gaming

• Faking first purchases to trigger new-user bonuses
• Device ID resetting to appear as multiple “new” purchasers
• Click injection to steal credit for organic purchases

The Impact on Businesses

A Ravelin study found that mobile apps lose $4.50 to fraud for every $100 in legitimate revenue. Specific consequences include:

• Chargebacks cost 2–5 % of revenue plus $15–$100 per dispute
• Wasted ad spend accounts for 20–35 % of budgets and incurs investigation labor
• Payment processor penalties can reach up to 10 % fees and trigger account suspensions
  Fraud also distorts key metrics by inflating ROAS by 15–40 % (per Singular data), skewing LTV calculations, and polluting user segmentation.

Detection Challenges

Modern purchase fraud presents unique detection hurdles:

1. False Positives: Legitimate whales making multiple purchases can resemble fraud patterns
2. Delayed Discovery: Friendly fraud often appears weeks after transactions
3. Multi-Vector Attacks: Combining technical exploits with social engineering
4. Geo-Spoofing: Advanced fraudsters use tools like GeeLark to simulate authentic regional purchase patterns

Key Indicators of Purchase Fraud

Behavioral Signals

• Purchase velocity exceeding 3 transactions per minute
• Immediate uninstalls after purchases
• Abnormal session lengths (extremely short or unusually long)

Technical Signals

• Mismatched device and billing locations
• Emulator signatures (common in 67 % of fraud per GuardSquare)
• Rooted or jailbroken devices
• IP addresses originating from known data centers

Transaction Patterns

• Identical purchase amounts across multiple accounts
• Testing small purchases before large ones
• Refund rates exceeding platform averages

Prevention Strategies

Layered Technical Defenses

1. Server-Side Validation
   Implement Google Play’s server-side purchase verification to verify purchases before delivering content.
2. Device Fingerprinting
   Combine 40+ parameters (GPU type, sensor data, etc.) to detect spoofing.
3. Behavioral Biometrics
   Analyze touch patterns and interaction timing to distinguish humans from bots.

Business Process Controls

• Set purchase velocity limits based on user segments
• Implement cooling-off periods for high-value purchases
• Require step-up authentication for abnormal patterns

Case Study: SDK Spoofing Detection and Block

A leading gaming app noticed a surge in small in-app purchases followed by refunds. Their fraud team used server-side validation to flag mismatched receipt signatures. By correlating suspicious receipts with emulator usage patterns, they deployed a rule to reject any purchase lacking a valid, non-spoofed store response. Within 48 hours, fraud attempts dropped by 85 %, saving the app over $120,000 in potential chargebacks.

How GeeLark Helps Combat Purchase Fraud

GeeLark provides a cloud-based hardware environment that enables more accurate fraud testing and prevention:

• Real Device IDs: Prevent emulator fingerprint spoofing
• Per-Profile IPs: Identify geo-spoofing patterns
• Android Version Variety: Test exploits across OS vulnerabilities
• Isolated Environments: Safely replicate fraud scenarios without production risk

Best Practices for Ongoing Fraud Prevention

Proactive Measures

• Continuous Testing: Regularly attempt to bypass your own systems using tools like GeeLark
• Industry Collaboration: Share fraud patterns through MCFC
• User Education: Implement in-app tutorials about secure purchases

Reactive Measures

• Real-time transaction monitoring with <5 s alerting
• Dynamic risk scoring that adapts to new patterns
• Automated challenge flows for suspicious activity

Key Takeaways

• Monitor behavioral and technical signals in real time to catch purchase fraud early.
• Implement layered defenses: combine server-side validation, device fingerprinting, and biometrics.
• Use isolated, real-device environments like GeeLark to test and refine anti-fraud measures.
• Establish clear business processes with velocity limits and step-up authentication.
• Collaborate with industry peers and continuously update your detection rules.

Conclusion

Purchase fraud represents an escalating arms race in mobile apps. By combining robust technical defenses, streamlined business controls, and specialized testing environments like GeeLark, businesses can significantly reduce fraud exposure while preserving a smooth user experience. Sign up for a free GeeLark trial today to test your purchase flows under real-world conditions and stay one step ahead of fraudsters.

People Also Ask

What is an example of payment fraud?

Payment fraud occurs when criminals use compromised or falsified payment methods to make unauthorized purchases or transfers. For example, a fraudster obtains someone’s stolen credit card details, orders expensive electronics online, and has them shipped to a drop address. Once the real cardholder reviews their statement and files a chargeback, the merchant loses both the merchandise and payment. This credit card fraud scenario illustrates how unauthorized transactions exploit payment systems, harming consumers and businesses alike.

What are the five most common types of consumer fraud?

The five most common types of consumer fraud are:

1. Identity theft – stealing personal information to open accounts or make purchases.
2. Credit/debit card fraud – unauthorized use of card details for transactions.
3. Phishing scams – fake emails or texts that trick victims into revealing credentials.
4. Online purchase scams – fake sellers or non-delivery of goods bought online.
5. Advance-fee (telemarketing) scams – paying upfront for products, services, or prizes that never arrive.

What are 8 types of fraud?

The eight most common types of fraud include:

1. Identity theft
2. Credit/debit card fraud
3. Insurance fraud
4. Securities and investment fraud
5. Tax fraud
6. Healthcare fraud
7. Phishing and online scams
8. Telemarketing and advance-fee fraud