How to Identify and Prevent Affiliate Fraud in Your Program

As an affiliate marketer, know that you are going to experience fraud within your program.

Affiliate fraud still exists today, just as much as it did in the early days of the industry. However, thanks to better technology solutions, more robust terms and conditions, better screening of partners, and improved program management, fraud is much easier to spot and take action to prevent in your program.

What is affiliate fraud

When it comes to affiliate marketing, fraud is a very broad term that encompasses anything that violates your program’s terms and conditions, including any unethical behavior by your affiliates. Unfortunately, there will always be a few individuals in this industry trying to skirt the system, which is why affiliate managers, both in-house and outsourced, need to be ever vigilant.

Why and how fraud occurs

The promise of easy-money incentivizes unethical partners to find loopholes in your terms and conditions and undermine existing fraud-prevention tools that you or your affiliate network have in place.

Lack of fraud check processes by program managers allows fraudulent partners to operate and potentially ruin an advertiser’s ROI and success in the affiliate channel.

There are countless ways a partner can participate in fraudulent activity within your affiliate program, including but not limited to:

• Sending you fake leads
• Bidding on your trademark terms
• Diverting and hiding links to cheat legitimate affiliates
• Using stolen credit cards
• Participating in promotional methods not authorized by your program

Fraudulent activity takes place with the goal of making money off your program. Knowing why and how fraud occurs is a good first step to taking action and fighting it.

How to spot fraud within your program

Spotting fraud can be done in a few ways:

• Monitor affiliates who are driving their first sales within your program. Questions to ask yourself in this scenario are:
  • Where is their performance coming from and why?
  • Were these transactions legitimate?
  • Is this partner legitimate?
• Monitor orders with high traffic and little conversions, and vice versa. Questions to ask yourself in this scenario are:
  • Which partner is driving this high traffic and low conversions, or vice versa?
    • Note: While it is common for content partners to drive more traffic than conversions, it’s also important to tune into astronomically high traffic or high conversions with little clicks, and other similar outcomes.
• Monitor spikes in coupon code usage. Questions to ask yourself in this scenario are:
  • Who is sharing this coupon code?
  • Is this code exclusive to them, or to another partner in your program?

Data is key. Fraud can always be found by paying attention to the data in your program. Your agency partner should always be keeping an eye on the data and monitoring anything abnormal that does not make sense based on current events and initiatives within your program. Anything abnormal can almost always be attributed to fraudulent activity.

Here are a few key places to check your data for potential fraud:

• Referring URLs: Use your data to look through referring URLs and visit suspicious pages you don’t recognize. If you notice several redirects, it could mean an affiliate is trying to hide the real source of traffic from you. For redirects, request URLs and screenshots of where your brand is being promoted. Verify that all sites promoting your brand could realistically drive the level of traffic being shown by looking at Alexa rankings, Similar Web metrics, audience engagement, etc.
  • Fraudulent traffic often hides behind front sites that may appear legitimate at first glance, but do not have the traffic numbers to support the conversions being shown.
• Sub-affiliate networks: Partnering with sub-affiliate networks within your affiliate program can add another layer of complexity to your fraud detection efforts. These networks can give your program a tremendous boost by allowing you instant access to thousands of additional affiliates. However, it also means you have less control on what affiliates you let into your program as they can always re-apply to one of these sub-affiliate networks. Again, your best tool to detect fraud from affiliates in these networks is to look at your referring URLs and determine the original source of the lead or sale.
• IP addresses: Look at all the IP addresses for your sales and leads. Do multiple transactions come from one single IP address? This could mean one person is placing multiple orders with stolen credit cards or some other form of illegal activity. If you can, try to authenticate these transactions to determine their validity.
• Data: Another good way to spot fraud is by identifying trends. If you notice a large, abnormal spike from one affiliate, it could mean that fraudulent activity is occurring. You’ll want to thoroughly investigate large spikes in sales or leads from otherwise low-performing affiliates. The days of simple cookie stuffing through tactics such as typosquatting have also grown more sophisticated with mobile attribution theft and display ad hijacking. With any traffic, you’ll want to look for signs of this attribution theft.
  • Key signs of this are abnormally high click rates, low conversion rates, and click-to-action times outside the norms of your program and verified clean traffic.

Know that fraud will happen in your program, but hope is not lost as there are ways to take immediate action and prevent it going forward.

Taking action & easy ways to prevent fraud

With affiliate marketing, an account manager can go back and reverse compensation to a partner if/when it’s been determined that their commissions were unwarranted.

When an affiliate program is properly managed, establishing a process for consistently checking for fraudulent activity is straightforward and it only requires due diligence.

Depending on the activity you are noticing, a general best practice would be to update your program’s terms and conditions, reach out to violating partners to take action accordingly, and reverse commissions or even terminate the partnership with the affiliate if necessary.

Two easy steps to safeguard against fraud include:

1. Manually approving every affiliate

Although manually approving affiliates is time-consuming, especially for large programs, it is your first line of defense against fraudulent affiliates. Before you approve an affiliate, we recommend evaluating:

• Their listed website(s) to ensure they are aligned with your brand, and the quality of their site content
  • This includes any broken links, hidden coupon pages, typos/misspelling in any site content, or even within the site name/URL
• If they meet your overall brand standards

You should also review any notes or history provided by the affiliate network (if available) to see if the affiliate has a history of fraudulent activity in other programs.

2. Enforce your new terms and conditions

When you update your affiliate terms and conditions, it’s always a good policy to send a newsletter out to your affiliates announcing the changes to your terms. Be sure to include a due date for affiliates to bring their promotional efforts in compliance to your updated terms. This will ensure that honest affiliates comply with your new terms and allow them time to update their campaigns.

Once the due date has passed, start enforcing your new terms rigorously. There are helpful fraud detection tools available, such as BrandVerity, that can:

• Monitor for keyword PPC violations
• Aid in your fraud check efforts
• Ensure that your affiliates are complying with all your policies

Create a routine

Once you have your affiliate terms and conditions updated and you’re familiar with how to check for fraud in your program, it’s important to create a routine to keep your affiliate program in check. We recommend you set aside time at least once per week to go through your data and your fraud checking tools to ensure affiliate compliance.

Start by checking your fraud detection tools, then look at your referring URLs from your sales and leads (pay special attention to referring URLs from sub-affiliate networks). From there, look at IP addresses to ensure no mass duplicate IPs. Finish up by looking for abnormal spikes in sales and leads from otherwise low-performing affiliates. The last two tasks we recommend adding to your routine are to create a blacklist of affiliates you don’t want in your program and staying current on industry trends and issues.

Creating a routine and sticking to it is going to give you the best shot at detecting and preventing fraud in your affiliate program. Keeping this routine will mean higher ROI, better on-brand promotion from your affiliates, and more success overall in your affiliate program.

Preventing fraud in your affiliate program requires consistent oversight, expertise and resources – services that an experienced affiliate program management agency can provide.

Questions about preventing fraud in your affiliate program? Contact our team!

Author: Kelsie Mosebar