Apple WWDC 2022: fraudulent transactions worth $1.5bn blocked on App Store in 2021

Tech company prevented more than 1.6 million untrustworthy apps from defrauding users, report shows

More than 835,000 problematic new apps and 805,000 app updates were either removed or rejected from Apple's App Store in 2021. AFP

Apple said it stopped fraudulent transactions worth about $1.5 billion on its App Store in 2021, as it continues to rein in potential illicit activity on its platform.

More than 1.6 million apps deemed risky and untrustworthy were prevented from defrauding users and more than 3.3 million stolen credit cards were blocked from making purchases last year, the iPhone-maker said in its annual fraud analysis on Wednesday.

Apple attributed the detection and prevention of malicious apps to its App Review programme, a multilayered approach that combines computer automation with manual human review, which is the “distinguishing component” of the process.

“Bad actors continue to evolve their methods of online fraud, often making their schemes harder to recognise,” the iPhone-maker said in the report released before its Worldwide Developers Conference next week.

“That is why Apple has continued to refine its processes, create new ones and engineer solutions to take on these threats.”

Apple's fraud prevention study for 2021 shows that the value of fraudulent transactions is more or less at par with the inaugural 2020 report, which pegged it at more than $1.5bn.

Still, the study shows the persistent problem of bad actors trying to take advantage of increased consumer dependence on the app ecosystem in general.

Dating app fraud, for instance, resulted in users losing a record $547m in 2021, an 80 per cent surge from the previous year, the US Federal Trade Commission reported in February.

That is higher than even gift cards — described by the FTC as the “No 1 payment method of choice of scammers” — that siphoned more than $148m from victims through the first three quarters of 2021, it said.

Meanwhile, the global fraud detection and prevention market is expected to grow to about $129.2bn by 2029, from $30.7bn in 2022, at a compound annual rate of 22.8 per cent, said Fortune Business Insights.

While Apple's App Review helped more than 107,000 new developers to add their apps to the store in 2021, more than 835,000 problematic new apps and 805,000 app updates were either rejected or removed because they were either unfinished or contained bugs that had to be addressed.

More than 34,500 apps were rejected because they contained hidden or undocumented features while more than 157,000 apps were refused because they were found to be “spam, copycats or misleading to users, such as manipulating them into making a purchase”, the report said.

The Apple review process does not end with apps as it also takes action against suspicious customer accounts.

The company deactivated more than 170 million accounts associated with fraudulent activity last year, with an additional 118 million attempted account creations rejected due to illicit patterns.

“If an account exhibits similar behaviours to those that have engaged in previous abuse, they are deactivated before they can be used at all,” it said.

Developer accounts that are detected to be fraudulent are terminated immediately. Apple shut down more than 802,000 of these last year, with an additional 153,000 enrolments dismissed over fraud concerns, preventing them from submitting their app to the system.

Furthermore, during the past 12 months, Apple discovered and blocked more than 63,500 illegitimate apps on pirate storefronts, which distribute malicious software often designed to mimic popular apps or modify them without developer authorisation.

In the past month alone, Apple prevented more than 3.3 million instances of apps distributed illicitly through its Enterprise Developer Programme, which is designed to help large organisations to develop and privately distribute their own apps for internal use.

Apple said developers can appeal to its review board over any app that may have been incorrectly flagged as fraudulent. Concerned developers will receive a 14-day appeal process notice before termination.

The technology company does not specify how much the App Store makes in its financial reports, even though it is part of its strong services segment.

Revenue from Apple's iOS app surged almost threefold to about $85 billion in 2021, from $28.6bn in 2016, estimates from app data platform Sensor Tower show.

Rival Google Play, the world's largest app marketplace, recorded revenue of about $48bn last year.

Developers, in turn, have earned more than $260bn — $60bn in 2021 alone — through the sale of digital goods and services on the App Store since its launch, Apple said in January.