Pharma Brands and Social Sites Fall Prey to Fraud

  |  September 28, 2009   |  Comments

The economic hardships of the past year have put a harsh light on the dark side of Internet marketing, according to a study released today by MarkMonitor.

The economic hardships of the past year have put a harsh light on the dark side of Internet marketing, according to a study released today by MarkMonitor.

The firm identifies a marked increase in phishing activities for payment services and the banking industry. It has also found a dramatic jump in fraud in the online pharmaceutical trade. The report refers to the overall fraudulent behavior it found as "brandjacking."

"On the pharmaceutical side there's an increase in customer demand for illegal goods because the economy is tougher and people lack health insurance," says MarkMonitor CMO Fred Felman.

The enterprise brand protection company found 19,163 domains abusing drug trademarks of the six leading prescription drug brands from July 2009. It also found 186 search advertisers selling drugs without a prescription, and more than 60 million spam e-mails.

"In terms of phishing practices, we have a lot of professionals out of work that can hack their way into sites and accomplish this kind of illegal activity. Either way the tough economy is feeding both these problems."

Felman believes both activities increase consumer mistrust of e-commerce, and also put legitimate brands on the defensive when it comes to search marketing and network placements on pharmaceutical and financial service content sites.

In its summer 2009 update of the "MarkMonitor Brandjacking Index," the firm also reported that pay-per-click abuse was up 19 percent from Q2 2008 and cybersquatting rose 9 percent.

Daily visitors to uncertified online pharmacies averaged 42,000 per site with 68 percent of the pharmacies having sufficient traffic to rank on Alexa. Using this traffic information as well as published figures for average e-commerce order size and traffic conversion rates, MarkMonitor estimates these pharmacies earn almost $11 billion in annual revenue.

During Q2 2009, phishing attacks reached record levels with more than 151,000 unique attacks, almost double since the beginning of the year. Brands in the financial and payment services industries are the most heavily-targeted by phishers, constituting 80 percent of all attacks in Q2 2009.The average number of phishing attacks per organization also increased to record levels, with an average of 351 attacks per organization in Q2 2009.

One of the most concerning data points involves social media. As social networking site use increased, related phishing attacks rose along with it; they were up 168 percent from the same period in 2008.

"Social networks are particularly vulnerable," said Felman, "because consumers have to post a lot of personal information to participate. Some sites have been very aggressive in stopping them. Facebook in particular has put a lot of technology in place to track user profiles that assume other IDs."

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