The affiliate marketing sector is already worth $12 billion, and yet it’s expected to grow by as much as 10% within the next few years — how many other marketing channels can claim that?
But — and it’s a big but — there is a dark side: affiliate fraud.
In this post, we explore what affiliate marketing fraud is, how it happens, and the affiliate fraud detection steps you can take to protect yourself, your company, and your customers.
What is affiliate fraud?
Affiliate fraud is the process of cheating businesses, affiliates, and consumers through one of multiple nefarious techniques (which we’ll get into below).
The aim is to trick merchants into paying affiliates their due commissions when they shouldn’t. Unethical affiliates may profit by deception for months or even years if they remain undetected.
Affiliate marketing fraud has evolved to include more sophisticated techniques, and modern scammers take advantage of various online tools to reap their illicit rewards. As a result, inexperienced merchants may find fraud harder to spot today than in the past.
How does affiliate marketing fraud work?
Affiliate fraudsters may utilize one of the following techniques to earn money illegitimately:
Spam
In legitimate campaigns, affiliates follow the same method: make a sale, earn the commission, and repeat. And, in theory, the more prospective leads you can reach, the more sales you’ll secure.
That’s why some affiliate scammers launch large-scale spam campaigns, using stolen email addresses and personal details. They’ll attempt to push recipients into buying from, or signing-up with, a retailer — reaping any and all commissions that come their way.
Of course, no one likes spam. So this fraud carries significant risk of reputation for any businesses unwittingly involved.
Fake websites
Perhaps more maliciously, fraudsters can clone websites and content owned by legitimate affiliates, misleading unassuming customers into converting.
This directs traffic to the wrong website; costing the retailer the value of the commission and the genuine traffic they should have received.
Proxy/fake leads
Affiliate scammers may use software to imitate buyers’ behavior and falsify transactions, or VPNs to generate fake traffic from other countries. This fools retailers into believing they’re reaching target markets abroad.
Malicious browser extensions
Malicious browser extensions may perform a useful function but are designed for unethical purposes, such as swapping a website’s ads to display an affiliate fraudster’s own instead.
The result? Loss of sales for the retailer, and many customers left out of pocket.
Fraudulent purchases
A scammer may purchase products with a stolen credit card and collect their commission before the retailer receives a chargeback or demand for a refund. In many cases, the fraudster disappears before the business realizes what’s gone on!
These are just a handful of examples — but it’s not intended to put you off.
While affiliate fraud can be seriously detrimental to the merchant’s budget — leading to expensive chargebacks and loss of reputation — there are ways to stop this crooked activity in its tracks.
Combat affiliate fraud with these 4 steps
You can try a number of affiliate fraud detection techniques to prevent against fraud:
- Know the tools you have to your disposal
LinkTrust’s integration with IPQS (IP Quality Score) empowers businesses to manage and prevent fraud through a number of measures, such as email verification, device fingerprinting, proxy VPN detection & IP filtering, phone number validation, and more.
This leaves you free to focus on running your marketing campaign with total peace of mind.
- Vet new affiliates carefully
Don’t be complacent when working with new affiliates — take the time to vet each one, before you contact them the green light.
Watch out for sites with sudden spikes in traffic in their history, those who show signs of plagiarizing content, or appear to be designed purely to run ads. And remember: if it seems too good to be true, it probably is!
- Know the signs
To subvert the age old adage: the best offence is a good defence. So make sure you recognize the signs of affiliate fraud, before they go too far.
Take a look at conversion sites and related metrics to make sure everything’s running smoothly. Look out for unusually-high traffic without conversions or a higher number of chargebacks and refunds than you expect. If anything sets your alarm bells ringing, confront the affiliate — if they’re hesitant to talk, that may be another red flag.
- Position yourself as untouchable
Specify which types of behavior, traffic, and techniques you consider acceptable and unacceptable in your terms & conditions. If would-be scammers see that you’re vigilant from the start, they may not consider trying to defraud you as worth the potential risk.
Campaign with confidence
Affiliate marketing is an effective way to generate more conversions and reach a wider audience — but you must stay vigilant against fraudsters.
Follow the affiliate fraud detection tips explored above to protect your business, your honest affiliates, and customers from scammers. More power to you!
Request a demo today to learn more about our robust fraud prevention methods.
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