A Fredericton, N.B.-based online security company has uncovered a multi-million dollar scheme to bilk companies that advertise online through Google and Twitter.

The University of New Brunswick-based Sentrant Security Inc. discovered more than 200 apps in the Google Play store that were running invisible ads that were charged back to legitimate online advertisers.

"The scheme involves over 20 shell companies, 247 apps, affecting over 500,000 installs on consumers' Android devices," said a statement from Sentrant.

Allen Dillon, the chief executive officer of Sentrant Security, says this kind of fraud is pervasive in the $170-billion industry.

"They're conducting a fraud by producing click fraud or false traffic ... into the digital advertising system," he said.


Allen Dillon, CEO of Sentrant Security Inc., says online fraud is a growing problem around the world. (CBC)

In this case, the cost of the scam is estimated at about $250,000 per day, said Dillon, but that's just on one digital platform.

"This same scam was also running on other open ad exchanges in the world, other tech providers similar to that of Twitter, so at the end of the day, there was a lot more than just $250,000 per day just on this one ad scam."

Sentrant conducted a study in June of 2015 and discovered 42.3 per cent of all digital advertising led to some sort of fraud, Dillon said.

"The problem is significant in that the money ends up in the hands of bad actors, organized crime and other criminal types," he said.

Dillon said the problem is expected to get worse over the next few years and advertisers aren't the only victims.

"Society, in general, [pays] because the advertisers, unfortunately, have to recover the losses through some means, so that will translate into fees to the public."