4 proven best practices to prevent affiliate marketing fraud
Running an affiliate marketing program is an excellent method to expand your business and increase income. Affiliates can earn a passive income by participating in these marketing schemes, which are both lucrative and convenient. Furthermore, it is a cost-effective marketing strategy for businesses looking to increase conversions and income.
Unfortunately, affiliate marketing’s digital tracking and attribution methodology are not always safe from fraudulent activity. In fact, according to statistics, in 2020, digital ad fraud was estimated to hit $35 billion. Problems arise when fraudsters use or abuse the affiliate marketing system to erroneously or unfairly get commissions.
Unfair behavior such as affiliate fraud can harm your earnings and undermine your advertising efforts. Although affiliate fraud is a problem, identifying the numerous strategies employed by scammers and unauthorized affiliates can help you protect yourself.
This article will go into
- What affiliate marketing fraud is
- How does affiliate marketing fraud occur?
- Best practices for preventing affiliate fraud
What is affiliate marketing fraud?
Simply said, affiliate fraud occurs when scammers engage in or carry out illicit operations with the intent of defrauding affiliate marketers or merchants, including breaking the terms and conditions in their affiliate agreement. These scammers might use a variety of techniques to deceive businesses into giving them fictitious affiliate commissions.
How does affiliate marketing fraud occur?
While most customers recognize and delete spam emails before they cause any harm, all it takes for spam to spread is for one naive customer to click on a link in a spam email and make a transaction from a scammer. Not only does spam cost businesses money, but when customers see the same product, brand, or company in their email box over and over again, the real business’s reputation is jeopardized.
Having an SPF Record can help with this. SPF helps to prevent spam from being sent from your domain by listing the IP addresses that are authorized to send email on behalf of your domain, and it can reduce the frequency of valid emails being marked as spam or returned to recipient’s mail servers. Generating and checking SPF records is simple.
To attract naïve buyers, fraudsters register variations of a vendor’s web domains create fake affiliate programs and domains to lure people into their trap. This practice, known as domain squatting, results in traffic being diverted away from the legal affiliate and directed to the fraudster’s site. The fraudster’s site could even be a clone copy of the authentic site, with identical visuals and wording. Customers make purchases on the clone website, causing the actual merchant to lose the sale and allowing fraudsters to cash in on profits earned by honest affiliates.
Fraudsters simulate consumer behavior using software to generate fake clicks, transactions, and conversions on offers. Greedy fraudsters engage in click fraud by continuously clicking on income-generating cost-per-click links to inflate their earnings and, in some instances, just to deprive merchants of revenue. Merchants can end up seeing their funds depleted without getting any sales.
Malicious browser extensions
Another way fraudsters can cheat the affiliate system is by providing browser extensions available for users to download from “extension stores” to enhance their browser’s capabilities. Although the extensions have a plausible purpose, such as downloading videos, their ultimate goal is to hijack legitimate users and tag them so they can collect affiliate and referral revenue. To receive credit for a sale, some extensions substitute a real affiliate code for their own, while others exchange ads on a website for their own.
Usually, affiliate commissions are sent promptly after a sale is completed, so a purchase made using a stolen credit card might be a significant issue. Why? The fraudster has already received the affiliate commission and is likely long gone by the time the merchant discovers the transaction was fraudulent, generally because the client files a chargeback or requests a refund.
Going against your terms and conditions
Many affiliate programs have certain promotional methods that are not allowed, and branded paid search is one of them. Some affiliates bid on brand names in order to maximize their revenue even when there is something in the terms and conditions about this.
Best practices to prevent Affiliate Marketing fraud
Although personally vetting affiliates takes time, especially for large programs, it is your first line of defense against fraud. We recommend that you evaluate the following before approving an affiliate:
Their website(s) should be listed to ensure that they are consistent with your brand
- If they live up to your brand’s expectations
- Whether they appear to be a link farm or not.
- You should also look over any notes or history offered by the affiliate network or SaaS platform to see if the affiliate has been dishonest in previous programs.
1: Enforce compliance with your new Terms and Conditions
When you update your affiliate terms and conditions, it’s always a good idea to send a newsletter to all of your affiliates to let them know about the changes. Include a deadline for affiliates to amend their promotional activities to comply with your new conditions.
This will ensure that honest affiliates comply with your revised conditions and give them time to make necessary changes to their campaigns. Once the deadline has passed, begin strictly enforcing your new terms. To prevent paid search violations and trademark violations you can use a tool like Brandverity to monitor it and keep on top of it.
2: Detecting fraud using data
Your data is the most potent fraud detection tool you have at your disposal. Here are a few major places to look for potential fraud in your data:
Examine referring URLs and visit dubious pages you don’t recognize. If you see many redirects, it’s possible that an affiliate is attempting to conceal the true source of traffic.
Request URLs and images of where your brand is being advertised for redirects. Examine Alexa rankings, Similar Web data, audience engagement, and other metrics to ensure that any sites advertising your business can realistically produce the traffic represented. Shady traffic is frequently hidden behind front sites that appear authentic at first sight but lack traffic metrics to support displayed conversions.
Using sub-affiliate networks as part of your affiliate program might add to the complexity of your fraud detection efforts. These networks can help your program grow significantly by providing you with immediate access to thousands of more affiliates. However, because affiliates can always re-apply to one of these sub-affiliate networks, you have less control over who you permit into your program. Again, looking at your referring URLs and determining the originating source of the lead or transaction is your best tool for detecting fraud from affiliates in these networks. To evaluate traffic on a sub-affiliate level, consider forcing sub-affiliate network partners to return a unique ID for all of their publishers.
Examine all of the IP addresses associated with your sales and leads. Is it possible for a single IP address to handle several transactions? This could indicate that a single person is placing several orders using stolen credit cards or engaging in other criminal behavior. Try to verify the legitimacy of these transactions. Identifying trends is another useful technique to uncover fraud.
An unusually high order value could indicate credit card fraud. Keep an eye out for these kinds of transactions and look into them. These are not usually the affiliates’ fault, as they can’t control who is visiting and using their website, but making sure you are on top of this is important.
Something shady could be going on if you detect a huge, unusual surge from one affiliate. Large jumps in revenues or leads from affiliates who are generally underperforming should be properly investigated. You should be on the lookout for symptoms of attribution theft in any traffic. Abnormally high click rates, poor conversion rates, and click-to-action time frames outside of your program’s standards, as well as verified clean traffic, are all key signs of this.
3: Check your cookie length
To ensure that you don’t pay commissions on orders that got cancelled or returned, making sure that your cookie length is the same amount of time as your returns policy means that you decrease the chances of being out of pocket. If you have a 30-day return or cancellation policy, make sure your cookie length is also 30 days.
Be ready to take action if you discover fraud in any form. Document the evidence and issue a violation warning to the affiliate. The affiliate may be out of compliance owing to a technical malfunction or something else entirely unrelated and will require more time to rectify the situation. However, if the problem recurs or the affiliate is implicated in another fraud attempt, you must remove that affiliate from your program.
4: Create a routine
It’s critical to establish a routine to keep your affiliate program in check once you’ve updated your affiliate terms and conditions and are aware of how to look for fraud in your program. To ensure affiliate compliance, we recommend setting aside one day every week to look over your data and fraud-checking tools.
Check your fraud detection software first, then look at your sales and lead referring URLs (pay special attention to referring URLs from sub-affiliate networks). After that, check IP addresses to make sure there aren’t any mass duplicates. Finally, check for unusual sales and leads from affiliates who are underperforming.
Making a blacklist of affiliates you don’t want in your program and remaining updated on industry trends and challenges are the last two things we offer adding to your routine.
Developing and keeping to a routine will give you the best chance of discovering and combating fraud in your affiliate program.
Affiliate marketing is a popular, strong, and profitable method of expanding your business, promoting products, and increasing revenue. However, it’s critical to take precautions and be proactive in order to keep your program and campaigns safe from scammers. Keep in mind to screen and engage with your affiliates carefully, keep a close eye on your affiliate program’s stats and user activity, block suspicious IP addresses and remove unethical affiliates.