Buying into a big problem: In-app purchase fraud

As developers have shifted away from a monetization model based on paid downloads to "freemium" or free-to-play approaches, many of them are looking at in-app purchasing (IAP) as a better way to create a revenue stream for their work. However, there's one major concern that could drag on both big and small app vendors: in-app fraud. Last month Swrve, a mobile analytics provider based in San Francisco, published data that suggested that one in five in-app purchases on Android apps or mobile games was fraudulent. The company looked at IAP data over the month of May, limiting it to apps and games that offered IAPs as an option. This may sound like a minor annoyance, but more sophisticated developers and publishers are increasingly relying on analytics to calculate not only how well a given app is performing but the lifetime value of their average customer. For more on this trend, check out this FierceDeveloper special report.

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