What is geo arbitrage and why is it draining my ad budget?

Geo arbitrage happens when commercial VPNs and residential proxy services route international clicks through US, UK, or German exit nodes, making them look domestic. You pay a premium CPM for a Tier-1 target country, but the actual visitor is overseas and has zero purchasing capability. BotRefund audits show that up to 12% of clicks in affected accounts are this type of masked foreign traffic.