October 16th 2019
Affiliate Fraud: How to Prevent It in Your Program

Yes, it's true. In the early days of affiliate marketing (think 1996 – 2007), the industry lacked transparency. And, this lack of transparency led to some questionable and even fraudulent behaviour by affiliates, brands and networks alike.

It's a different reality today, thanks in large part to:

Does fraud still exist in affiliate marketing today? Sure. In the same way it does with paid marketing, programmatic marketing, influencer marketing, etc. A key difference is that, with affiliate marketing, an account manager has the ability to go back and reverse compensation to a partner if/when it's been determined that their commissions were unwarranted.

When an affiliate programme is properly managed, establishing a process for consistently checking for fraudulent activity is quite straightforward. It simply requires due diligence.

With the major holiday shopping season right around the corner, we thought it timely to address the issue of fraud in affiliate marketing, how to spot it quickly and provide steps for what to do if/when you discover it.


Table of Contents

  1. What is Affiliate Fraud?
  2. Why and How Fraud Occurs
  3. Easy Ways to Prevent Fraud
  4. Using Data to Spot Fraud
  5. Create a Routine


What is Affiliate Fraud?

When it comes to affiliate marketing, fraud is a very broad term that encompasses anything that violates your affiliate terms and conditions, including any unethical or unscrupulous behaviour by your affiliates. Unfortunately, there will always be a few unsavoury individuals in our 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

  1. The promise of easy-money incentivises unethical groups and individuals to find loopholes in your terms and conditions and undermine existing fraud-prevention tools that you or your affiliate network have in place.
  2. Lack of fraud check processes by programme managers allows fraudsters to operate and potentially ruin an advertiser's ROI and success in the affiliate channel.
  3. There are countless ways a fraudster can scam your affiliate programme. Those trying to defraud you can send you fake leads, bid on your trademark, divert and hide links to cheat legitimate affiliates, use stolen credit cards, and more. All with the goal of making money off of your programme. Just knowing why and how fraud occurs is a good first step to taking action and fighting it.


Easy Ways to Prevent Fraud

Manually Approve Every Affiliate.

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

  • Their website(s) listed to ensure they are aligned with your brand.
  • If they meet your brand standards.
  • Whether or not they look like a link farm.

You should also review any notes or history provided by the affiliate network or SaaS platform (if available) to see if the affiliate has behaved fraudulently in other programmes.

Enforce your new Terms and Conditions.

When you update your affiliate terms and conditions it is always a good policy to send a newsletter out to all of 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 of your policies.


Using Data to Spot Fraud

The most powerful fraud detection tool you have at your disposal is your data. 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 recognise. 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. Shady traffic often hides behind front sites that may appear legitimate at first glance, but do not have the traffic numbers to support conversions being shown.

  • Sub-affiliate networks: Partnering with sub-affiliate networks within your affiliate programme can add another layer of complexity to your fraud detection efforts. These networks can give your programme 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 in to your programme 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. Consider requiring sub-affiliate network partners to pass back a unique ID for all of their publishers to analyse traffic on a sub-affiliate level.

  • IP addresses: Look at all of 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 something fishy is going on. 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, SDK spoofing, 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 programme and verified clean traffic.

When you do find fraud in any form, be prepared to take action. Document the evidence and send the affiliate a violation warning. The affiliate may be out of compliance due to a glitch or something innocent and will need time to correct the issue. But if the issue occurs again or the affiliate is caught in another fraud attempt, it's essential to terminate that affiliate from your programme.


Create a Routine

Once you have your affiliate terms and conditions updated and you're familiar with how to check for fraud in your programme, it's important to create a routine to keep your affiliate programme in check. We recommend you set aside time one day each 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 programme 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 stomping out fraud in your affiliate programme. Keeping this routine will mean higher ROI, better on-brand promotion from your affiliates, and more success overall in your affiliate programme.

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


Questions about preventing fraud in your affiliate programme? Contact our team!
Author: Galen Schneider