Why You Shouldn’t Ignore Affiliate Marketing Fraud and How to Tackle It

Affiliate marketing programs are not immune to fraud. Fake leads, fake clicks, fake conversions, and other fraudulent activity are present in almost any brand’s affiliate partnership.

Yet, just because it’s so widespread doesn’t mean you should tolerate or allow it.

Today we’ll dive deep into the topic of affiliate fraud, see what types of it exist out there, discuss why it’s crucial for marketers to fight it, and share the tools to eliminate fraud from your partner program.

Types of affiliate marketing fraud

Before we discuss why and how to get rid of it, let’s identify the main types of affiliate fraud.

Cookie stuffing

A practice where con artists secretly drop cookies on user devices, which allows them to claim rewards for the conversions that they had no association with or influence over.

Website spoofing

When fraudsters spoof traffic by presenting websites with low ratings and traffic as high-value resources to lure in advertisers.

Fake leads

Where abusers submit non-existent leads presented as legitimate ones and claim conversion rewards.

Fraudulent clicks and bot traffic

Click fraud is when click farms and bots generate non-genuine affiliate traffic, earning them a commission from affiliate links that they’re not really entitled to.

Credit card fraud

Fraudsters purchase products with stolen credit cards causing unsuspecting legitimate businesses to deal with payment and loss of goods.

There are other types of suspicious activities that companies have to deal with, but the mains ones center around imitating human behavior and pretending to be a genuine user when in reality it’s all fake traffic.

Why it’s important to prevent and manage affiliate marketing fraud

As many as 30% of brands reported that they’ve experienced fraud, and as much as $1.4 billion in revenue was lost due to affiliate fraud back in 2020. Since then, affiliate industry grew and new fraudulent methods came up.

If you don’t pay attention to potential and actual fraud instances, you’ll put your business at big risk.

• Wasted marketing budgets
• Wasted time of the team dealing with fraud
• Losing legitimate affiliates because they’ll miss out on commissions and sales
• Missing out on revenues and new clients
• Dealing with a decreased conversion rate

Affiliate fraud is upsetting any way you look at it. Disappointment in people you thought could become your long-term partners, lost sales and goods, damage to your reputation, and headache explaining it all to shareholders.

Perhaps the most devastating aspect of fraudulent traffic, false clicks, and other types of affiliate marketing scams is that it turns decision-makers and business owners away from this powerful promotion tool.

How to protect yourself against affiliate marketing fraud

Luckily, there are multiple ways an affiliate marketer can protect themselves against the common types of fraudulent affiliates and the consequences of their activities.

Note: You won’t be able to protect yourself against 100% of common affiliate marketing scams. Technology has limitations in what it can do, and it’s practically impossible to predict and prevent all the creative ways fraudulent affiliates come up with to misuse partner programs.

This shouldn’t be daunting to you though. Yes, you won’t be able to eliminate every single instance of fraud, but you can minimize them with the right tools and policies.

Tapfiliate offers a number of affiliate fraud prevention methods, including:

Pre-approval system before the person becomes an affiliate

The easiest way to reduce affiliate scams is to filter who gets to promote your brand to begin with.

As a part of your partner recruitment process, review their applications, ask for their company and website information to see they’re legit. You might also go as far as have a call with them first, but that may be time-consuming and scare off some affiliates who are not yet ready for relationship-building activities.

Auto tracking if a referral link is used by the affiliate to purchase

Sometimes affiliate partners use their own links to make a purchase. That’s obviously not the intended use of affiliate links, and Tapfiliate can flag such actions by comparing the IPs of the partner and the conversion.

Tip: The system doesn’t automatically cancel such conversions, so it’s up to the program manager to decide whether or not to disapprove commissions for such transactions.

Key attributes review and blacklisting

You can backlist several values of key attributes (such as IP or domain), compare the attributes between clicks and conversions, and do sliding window checks.

Performing de-duplication on ID values

Sometimes dupes can be registered multiple times and counted as unique users each time. This is especially crucial for affiliate programs where conversions are not sales but sign ups, registrations, downloads, etc.

More ways to protect your program against affiliate fraud

The key to dealing with fraud is by tackling it in many different ways all at once.

So you’ve already vetted your partners by reviewing them before having them join the affiliate network, and you’ve implemented the tools available in your affiliate tracker. What’s next?

Update your Terms and Conditions

Affiliate program T&Cs need to reflect what’s allowed and what’s not for partners, and consequences of breaching the rules. This may not keep the naughtiest partners away from doing something bad but will give the rest an understanding that they can’t steal from you or damage your reputation.

Tip: Every time you update your program rules, not only regarding potential fraud, send a notification or an email to your partner base. Do this even if you have a clause saying that you can make changes at any point. Nobody likes to be blindsided or treated as if they’re not important. You sharing all changes and amendments will signal to affiliates that you’re respectful and supportive as a business partner.

Use reports and monitoring to detect potential fraud

Data is not only king, but it’s also your biggest ally in the battle for creating a legitimate affiliate program with great partners and cutting down on fraudulent behavior.

With data reports, you can detect fraud by:

1. Reviewing referring URLs, visiting pages you don’t recognize, checking if the abundance of redirects is made to hide the actual, fraudulent source of traffic.
2. Checking how many conversions are generated from a single IP address. This could signal that one person is placing a bunch of orders or pretending to be a genuine user who is clicking your links. This can also mean that someone is committing credit card theft and fraud.
3. Monitoring abnormalities. Sometimes a big order is just a big order. In other cases, though, it can signal credit card fraud. Sudden surges from individual affiliates can also mean something shady. Either they step up their game and promote you excellently, or they’ve decided to make use of the loophole they found in your program and make the most of the fake clicks or other deceptive tactics.

Overall, run regular checks and review the dynamics of your affiliate program. Do random checks of different transactions and conversions by different partners. Make it a routine so you don’t miss out on something big happening right under your nose.

Also, it’s your call how to treat offenders, but it’s best to not give them more than a single second chance. Dealing with fraudulent affiliate partners is not good business, they’ll always find a way to trick you.

Invest in relationships with affiliates

Sometimes affiliates resort to shady practices because they feel underappreciated and undervalued. While building rapport won’t magically erase all violations, you’ll be able to at least cut down on their motivation, plus turn a number of registered affiliates into actual business partners.

See what frustrates them and what makes them happy, address and fix those aspects of your program that are unfair or not transparent enough. For instant, your affiliate commissions may be significantly lower than the market standard. Surely, it doesn’t excuse fraudulent tactics, but it can be one of the reasons people resort to them.

Have follow-up calls and send them emails to share what work you’ve done and ensure it’s all sorted on their end, too.

Investing your time into this is not only good for the financial success of your affiliate partner program but also for your soul. Dealing with deceptive practices and constant violations is tiring. It sucks all the energy out of you, which is the opposite of what we all need in this day and age.

Align cookie length with the refund policy

One way people trick affiliate programs is by getting commissions for placed orders that are later returned and refunded. That’s why if your return policy is 40 days, your cookie length needs to match that time period.

Why use affiliate marketing if there is so much fraudulent activity there?

Sadly, nothing in online business is immune to fraud.

When it comes to affiliate campaigns, the benefits definitely outweigh the potential downsides and risks. Affiliate partner programs help companies reach new audiences at a relatively low cost compared to traditional ads, and they allow your brand to benefit from association with thought leaders.

If your team is on a low budget, then affiliate marketing is a life saviour. Your main investments are the time of your staff and the affiliate management platform that you get to manage and automate the partner program.

It’s not the fastest process, but if you give it time and treat honest affiliates fairly, you’ll see amazing results in higher conversions, wider market reach, stronger brand awareness, and a great return on investment.

Affiliate marketing industry gives eCommerce, SaaS, and other types of businesses unique possibilities to scale and grow sustainably. With the right knowledge and tools in place, you can protect yourself against fraudulent practices and move your brand forward.