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New Android Smartphones in Developing Markets Sold With Pre-installed Malware

Upstream discovers infected devices for sale across 8 developing markets

LONDON, July 6th, 2018 – Upstream has today revealed that new inexpensive smartphone devices being sold to consumers in developing markets, many of whom are coming online for the first time, contain pre-installed malware, which collects their personal information, depletes their mobile data allowance and triggers fraudulent subscription charges to their pre-paid credit, without their knowledge or consent.

Guy Krief, CEO of Upstream, explains the findings: “Our Secure-D platform has uncovered that a number of cheap smartphones for sale in developing markets, such as Brazil, Egypt, Myanmar and South Africa, are sold with a digital ad fraud malware pre-installed, before the user has even turned the phone on for the first time. It communicates with, and sends unauthorized personal user data to a server in Asia, depletes their data allowance and signs them up to premium subscription services without their consent.”

Smartphone penetration in developing markets is growing rapidly, forecast to reach 62 percent by 2020, and, as a result, broadband connections are also increasing, expected to rise to 88 percent in Brazil by 2020, according to the GSMA Mobile Economy 2017 report. That said, the cost of data in emerging markets remains expensive, relative to local income levels, compared to what holds in developed markets (indicatively, in Brazil, 1GB of data would take the average person 6 hours of work to pay for). Moreover, in emerging markets, where 80 percent of people are unbanked, and most are pre-paid mobile subscribers, carrier billing — a payment method allowing users to purchase digital services by charging payments to their air time balance — is often the only way they can pay for digital services. The combination of these conditions creates an explosive context for the effects pre-installed smartphone malware has on consumers in emerging markets.

Krief added: “This malware is targeting consumers who are often getting online for the first time via their mobile device and have no other way to access the internet. In emerging markets, where online clicks can trigger a purchase and charges to airtime credit, such online advertising fraud directly impacts the end consumer. These users are immediately falling victim to fraudulent activity, which is using their mobile data allowance and taking money from their air time credit. In one month, we observed over 1.3 million fraudulent attempts to purchase a single digital premium service in Brazil alone, the first of the markets where we identified this issue in. A similar pattern was identified by our Secure-D platform in other emerging markets, like Myanmar, Egypt and South Africa.”

Upstream’s carrier-grade platform Secure-D combines machine learning algorithms with payment processing workflows to protect mobile operators and their subscribers against online transaction fraud and data depletion. The Secure-D platform, deployed in 12 markets with 18 mobile operators, processes over 3.3 million transaction requests per day.

Krief commented: “Digital ad fraud is a global phenomenon, responsible for a loss of more than 30 percent of global digital investment. It is mostly about fake impressions and clicks, generated by machines. If left unchecked, digital ad fraud has the potential to hold back the mobile internet revolution in developing markets by eroding customer trust in the entire digital ecosystem. From a business perspective, and morally, protecting the next three billion consumers who are coming online for the first time needs to be a top priority for organizations working in high-growth markets.”

For more information, please visit www.upstreamsystems.com

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