Affiliate Marketing Fraud

What is it?  How does it work?  How does it affect my business?

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What is Affiliate Fraud?

Affiliate marketing fraud aims to cheat merchants, buyers, or legitimate affiliates through the use of misleading or fraudulent activities to earn illegitimate commissions.

SIGNS OF AFFILIATE FRAUD

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Sharp Increase In Affiliate Spend

Affiliates using fraudulent techniques to disguise their own activity as customer activity can often cause a sharp spike in affiliate marketing spend.  

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Stagnant Affiliate Program ROI

Despite increased affiliate spend, fraudulent activities such as cookie stuffing don’t actually bring increased business, which negatively impacts the ROI for that spend.  

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Increased Affiliate Complaints

Affiliate fraud can hurt honest affiliate partners who try their best to bring in new business. When credit goes to fraudsters, these affiliates go uncompensated -sparking complaints or mass desertions of the program.  

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Traffic From Unfamiliar Sources

Human fraud farms that artificially inflate performance numbers result in traffic from unusual sources. For example, IP addresses from third-world countries interacting with campaigns exclusively in the USA.   

Methods of Affiliate Fraud

Because of the mechanics behind affiliate programs, where “tags” are placed in browsers or in referral links that identify the referrer, it can be difficult to monitor all of the various incoming traffic for validity. This presents fraudsters with many opportunities to hijack the process.

Cookie Stuffing

A malicious affiliate loads a modified cookie onto a potential customer’s computer after they interact with a part of the affiliate’s online platform. Whenever that visitor visits other websites to make purchases, the affiliate is associated with the referral.

Bots

Code-driven, autonomous programs that use victim computer networks to perform activities like spamming forms, watching videos, faking website visits, clicking ad links, or other functions that skew traffic metrics. 

Human Fraud

Through the use of large groups of individuals, fraudsters perform coordinated activities such as clicking on ads, filling out forms, signing up for newsletters, or following website referral links to generate impressions. This more nuanced human behavior makes it harder for fraud detection methods to succeed. 

Malicious Browser Extensions

Malicious software or extensions are loaded onto a visitor’s computer, where they add tags to URLs, intercept browser requests, modify traffic, monitor visitor activity, or perform other activities that reward the fraudster. 

Domain Spoofing

A fraudster replicates an existing valid website and publishes it to several similar domains with slightly different spellings or punctuation in an attempt to refer customers to the legitimate merchant and receive credit for future sales. 

Fake Influencers + Websites

Businesses unknowingly associate with fake websites or online personalities that use bots or purchased followers to build their persona. 

Fake Leads

A fraudulent affiliate takes advantage of the cost-per-lead model by automatically or manually filling out lead forms with fake or stolen information, which awards the affiliate with a commission for each completed document. 

Fraudulent Purchases

Often the most costly for businesses, this occurs when an affiliate fakes a sale (often with stolen credit card numbers) and collects the commission for the sale before the fraudulent purchase is flagged or the product returned. The victim business may also face chargebacks and additional shipping fees. 

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Improve Your Affiliate Marketing with Anura

Ad fraud solutions are incredibly useful for preventing digital ad fraud and protecting the marketing ROI of your business from fraudsters. Are your affiliate marketing campaigns ad fraud free?

How Affiliate Fraud Affects Your Bottom Line

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Credit Card Chargebacks

Fraudsters take advantage of the long payout time (60-120 days) to steal your money with credit card chargebacks.  These charges occur when a cybercriminal makes a fraudulent purchase and the affiliate receives payment, but by the time the victim realizes the transaction is fake and disputes the fraudulent transaction, it is very difficult to receive a refund without the bank forcibly taking back the funds.

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Revenue Stream Losses

Another way that ad fraud indirectly affects your bottom line actually occurs when your business tries to prevent fraud without doing the research. One common technical solution attempts to block traffic from known or suspected fraudulent sources, identifying them by IP address or suspicious behaviors, such as the amount of time spent on a website or their global location. However, when you use this method of ad fraud detection, it can backfire and block activity that looks fraudulent but is actually legitimate. 

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The Danger of Non-Compliance

TCPA applies to the digital advertising world. In this case, when a business does not properly research or vet a lead from affiliates or lead forms, and they then contact the individual (whether it's a call or email) using fraudulent data, it could violate TCPA compliance. Frequent TCPA rule violations can lead to hefty fines, ranging from $500-$1,500, should the victim decide to file a complaint. 

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Tarnished Brand Reputation

Consumers, publishers, and affiliate partners do not want to do business with a brand associated with ad fraud. If that fraudulent gain involves your company, even if the data theft wasn’t your responsibility, chargebacks or even unsolicited calls from your brand can result in customers forming a bad association or feeling harassed. This is not the type of connection you want with your reputation. 

How To Defend Against Affiliate Fraud With Anura

While technology has armed fraudsters with new tools to commit fraud, it has also given marketers new ways to counter said fraud. Ad fraud solutions such as Anura can help you monitor traffic in real-time and provide a comprehensive overview of every visitor who interacts with your web asset—and identify fraudulent activity right away. This way, you can identify fraudulent leads before paying affiliates for them, saving your money and boosting ROI. 

Affiliate Fraud 101 eBook

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