How to Prevent Fraud in Your Affiliate Marketing Program
Affiliate marketing helps companies efficiently market their products. The benefits of affiliate marketing are well known. Marketers can work with lower budgets, use fewer resources for marketing products, and receive a higher return on investment.
The perks of affiliate marketing can not be understated, but some challenges can come with this marketing strategy. One such challenge is affiliate marketing fraud.
By 2022, affiliate marketing will be worth USD 8 billion. As a result, the industry is an increasingly attractive target for fraud. In 2020, the world’s marketers were expected to lose USD 1.4 billion to affiliate marketing fraud. That means marketers can find themselves paying affiliates for non-existent contributions made towards sales and profits.
81% of marketers leverage affiliate marketing to boost their company’s revenue. Affiliates market products on your behalf, and they receive a proportion of each sale made. In several cases, 20% of brand revenue comes from affiliate marketing. Dealing with such massive figures, your company must know how to mitigate affiliate marketing fraud problems.
What is Affiliate Marketing Fraud?
Affiliate marketing fraud refers to illegal behavior employed to generate higher levels of commission from an affiliate program. The term addresses all the activities that fall outside of any affiliate program’s outlined terms and conditions. Fraud is a problem across many industries, and affiliate marketing is no different.
Affiliates earn commission through models based around cost-per-click (CPC), cost-per-acquisition (CPA), cost-per-lead (CPL), and cost-per-impression (CPM). Depending on the metric, affiliate marketing fraudsters will attempt different tactics that undermine your program and cost you money.
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With a cloud solution architect, SaaS companies can improve their security. However, technological developments make it difficult to recognize some kinds of fraudulent behavior, especially in industries like digital marketing. This is because fraud is not as always blatant and conspicuous as believed to be.
Companies constantly evolve their terms and conditions and can employ top online legal services to lower the risk of fraud.
Types of Affiliate Marketing Fraud
Over many years, affiliate marketing fraud has reared its head in a variety of ways. Before, it could include auto-refreshing pages, constant background pop-ups, spam email, and referral links, or purchased website traffic. Companies have wised up to many of the tactics that affiliate marketing fraudsters use to game the system, but other methods are now becoming more apparent.
Plagiarizing Other Affiliate Content
Plagiarizing affiliates’ content is a means of generating search traffic by stealing it from other affiliate marketers. This tactic breaks copyright laws and also negatively impacts other affiliate marketers in any given program.
Cookie Stuffing Website Visitors
Cookie stuffing is a problematic practice to track and discern. Third-party cookies from websites unrelated to the affiliate get dropped in the background. This tactic simulates an ad click even though the user has never done so.
Typosquatting is a tactic that targets misspelled URL queries. Much like phone scammers that partake in voice phishing to imitate legitimate businesses, fraudsters can use typosquatting to emulate businesses online. People can use misspelled URLs to mimic the original site and redirect users to malicious websites.
Adware and Spyware Software
An affiliate can offer perceived value and entice users into downloading applications. The affiliate can add spyware software that automatically inserts affiliate links without the user’s knowledge.
It is illegal to use stolen data to generate leads and sales for your company. Using bots, a person can abuse contact forms. The bots can click through links and ads then use actual human data to fill in forms.
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Ways to Prevent Affiliate Marketing Fraud
Affiliate marketing fraud is not invisible. Companies can track and identify strategies and tactics that resemble fraudulent behavior. To lower the risks of affiliate marketing fraud, your company can try the following tactics.
Outline Clear Terms and Conditions
Clearly define the strategies and practices that are acceptable in your affiliate marketing program. Outline detailed terms and conditions that will protect your company under law and deter fraudsters from defrauding your program. When you uncover affiliates engaging in illegal or inappropriate behavior, you can remove them from your affiliate marketing program without consequence.
Screen Your Affiliates and Communicate Regularly
You have probably come across this proverb at some point in time: “prevention is better than cure.” It’s easier to prevent your company from getting into bed with the wrong affiliates than it is to address problems with them later. You should do due diligence checks in verifying the suitability of potential affiliates for your affiliate program. Knowing partners can improve the efficiency and effectiveness in marketing teams.
Check their website and social media channels. Assess how they use their media outlets against your own digital marketing strategies. Look into the affiliate’s potential backlink strategies and marketing practices. Consider whether the potential affiliate’s branding is in line with your own. If there are any red flags in your assessment, they could prove to be indicators of your relationship going forward.
Improve Digital Security
To protect your company and affiliate partners from fraudulent behavior, you could invest in digital asset security and management solutions. The last thing a company needs is to be the reason for successful fraudulent attacks. You need to ensure that your customers’ data is under lock and key. Data security can lower the likelihood of transactions made using stolen data.
You can improve your data security by adding authentication to customer activities, encrypting data, and storing data in suitable locations. Whether you use in-house or external data management solutions, you should ensure your security is tight. That way, you can recognize when new or unusual behavior occurs on customer accounts.
Block Suspicious Web Behavior
Your company needs to monitor the IP addresses of users that make purchases through your affiliate marketing program. You will want to keep an eye on IP addresses that make multiple sales and seem suspicious. It could be prudent to reject IP duplicates that make multiple conversions, as they could be a sign of fraudulent behavior.
It is great to monitor IP addresses as every device connected to the internet is assigned one. This way, you can verify the general geography of devices making transactions and check the user’s internet service provider (ISP). It will also be possible to check if the IP address is blacklisted anywhere. If IP addresses do not pass these simple checks, they may resemble fraudulent behavior.
Marketers dive deep into data and analytics to assess the success of their marketing strategies. You should carefully monitor your affiliate marketing program in the same way. You can watch the affiliate marketing keywords, traffic data, and other key metrics to assess the campaign performances of your affiliate marketers.
If there are sudden spikes in traffic, the affiliate may be engaging in improper practices. In-depth analytics can help you spot other fraudulent patterns in your affiliate program. Are there sales and conversions that seem illogical? Perhaps you uncover conversions from unusual geographic locations or an unreasonably high click-through rate with no conversions at all.
You may uncover conversions are completed after an extended period between click-through and purchase has elapsed. These are suspicious sources of lead generation or sales. By delving into the data and assessing different strands according to varying metrics, it is easier to unearth fraudulent behavior in your affiliate marketing program.
Use Fraud Prevention Platforms
Great SaaS marketing tools and strategies are undermined when your affiliate marketing program is affected by fraud. Some tools and technologies can aid your fraud prevention endeavors. Some companies use voice recognition software and voice biometrics to improve customer phone call security.
Similarly, fraud prevention platforms can flag suspicious activity when it happens. That means you can recognize suspicious behavior in your affiliate marketing program before paying out commissions. Fraud prevention platforms will give you a sense of security and peace when paying for the work of affiliate marketers.
Invest in Fraud Prevention
Every company should focus on mitigating affiliate marketing fraud because its effects can be devastating. It can impact a company’s reputation, its affiliate program’s reputation, and damage trust in its brand. Conversely, you can successfully prevent affiliate marketing fraud. It will free up resources for you to focus on developing deep and lasting affiliate relationships instead.