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5 Affiliate Marketing Scams Companies Should Watch Out For

Affiliate marketing can be an incredibly valuable channel for driving traffic and leads to your business’ website. Partnering with affiliates to display ads on their site, have them promote your products or services, and generally raise your brand awareness can provide a significant boost to your lead generation.

This may be why some companies spend millions of dollars on their affiliate programs—building massive networks of people who promote their brand. For example, at one point, Uber was spending $150 million annually on affiliate marketing.

However, where there’s money, there are crooks who will look to steal it. The estimates of how much affiliate fraud costs the global economy each year vary—which may be because a certain amount of fraud goes either undetected or unreported so totals have to be estimated. For example, fraud estimates from different sources cited by Business of Apps range between $34 billion and $6.5 billion per year.

At one point, Uber discovered that $100 million of its $150 million marketing budget was being wasted on marketing fraud.

How Can Affiliate Marketing Scams Affect Advertisers?

The impact of affiliate marketing fraud can be enormous for advertisers. However, the exact level of harm caused can vary depending on the fraud, how long it goes undetected, and the size of the affiliate campaign. Some potential impacts of affiliate fraud include:

  • Reduced Return on Investment for Affiliate Marketing Spend. When scammers infest your affiliate program, the ROI you see from that program tends to drop dramatically. This is because the scammers are supplying fake leads who won’t convert to customers—dragging down your lead-to-customer conversion rate and reducing the amount of business generated for every ad dollar you spend.

  • Negative PR. There are a few ways that getting involved with an affiliate scam can hurt a business’ reputation. First, reaching out to fraudulently-generated contacts can generate negative press as people complain about unwanted marketing messages. Second, it can give the impression that the business is willing to use stolen data to make sales. Third, if regulators assess fines under the Telephone Consumer Protection Act of 1991 (TCPA), odds are that it will generate headlines that paint the company in a negative light. This negative PR can drive away potential customers and business partners alike.

  • Direct Monetary Losses. Money paid to scammers is money wasted. Marketing scams take money from businesses without providing any real benefit—resulting in wasted ad spend. Additionally, if regulators determine that marketing calls to fraudulently-added leads violate TCPA guidelines, that could mean losing another $500 to $1,500 per call made to the fake leads.

  • Loss of Trust from Legitimate Affiliates. Some affiliate fraud techniques result in the misattribution of legitimate leads. They steal the credit for leads so the fraudster gets paid instead of the affiliate who actually promoted your brand. This can, naturally, lead to trustworthy affiliates becoming frustrated since they aren’t getting paid for the leads they bring. The legitimate affiliates then leave the program—often warning their colleagues off of it as well.

The loss of marketing performance, wasted ad spend, and reputational damage that affiliate marketing scams can cause are all strong reasons to try to craft fraud-resistant affiliate campaigns.

5 Scams Targeting Affiliate Marketing Campaigns

To put a stop to affiliate marketing fraud, it’s important to know what kind of affiliate scams fraudsters might try to use against you. There are many kinds of scams that might be used against your campaigns—largely because scammers are constantly evolving their tactics to make themselves harder to detect and counter.

Some examples of common affiliate scams and fraud techniques include:

  • Cookie Stuffing for Lead Misattribution. Cookies are a common tool for tracking a visitor’s browser history and attributing that visitor to a given affiliate in affiliate marketing campaigns. Cookie stuffing drops third-party cookies on a visitor’s web browser (often without their consent or knowledge) so that if the visitor happens to go to a merchant’s site later, the fraudster will get the credit for it. This takes away money from legitimate affiliates who work to drive business and causes you to spend money on leads that the fraudster never had a hand in influencing.

  • Human Fraud. Some setups use a large number of human beings to go click on ads, fill out forms, or take other actions on your website. This type of fraud is often more difficult to spot because there are real people behind the screen instead of an automated bot that behaves in a consistent manner. Human fraud, for example, can easily bypass the “honeypot” form fields that often trip up a bot since they won’t see them.

  • Bot Traffic. Some unscrupulous affiliates who are looking to make a quick buck will turn to the use of bot traffic to generate fake leads and clicks in an affiliate marketing campaign. There are many varieties of bot attack, such as the use of widespread automated botnets to fill out forms on your website or screen-refreshing bots that drive up impressions. Bots can also be employed for other purposes outside of affiliate scams. For example, some bots are used to carry out distributed denial of service (DDoS) attacks that lock up a company’s IT resources by flooding them with more requests than they can handle.

  • Transaction Fraud. This goes a step beyond simply claiming credit for generating a lead to actually complete a fraudulent transaction using stolen credit card information. This type of fraud, when carried out by an affiliate, can lead to stolen ad revenue, loss of a product, and credit card chargebacks. In essence, you would be paying a fraudster to commit fraud against you.

  • URL Hijacking. To take credit for organic or direct traffic that would normally visit your website anyways, a fraudster might set up a URL online that is similar to your company’s website or the name of one of your company’s products or services. When visitors go to the fraudulent web page, they get a cookie stuffed into their browser and redirected to your website. This allows the fraudster to take credit for generating traffic for your website every time someone puts a typo into their web browser or clicks on the wrong page in their browser's search engine results page (SERP). URL hijacking could be considered a subset of cookie stuffing, but is distinct enough to warrant special mention.

Within the five broad categories of affiliate scams/fraud techniques listed above, there is seemingly endless room for variation as scammers refine their strategies. For example, some bot traffic fraud techniques rely on bots installed in large networks of malware-compromised devices—creating vast botnets of thousands of computers, smartphones, and IoT devices that carry out fraud. Meanwhile, less sophisticated fraudsters might simply run a bot from a single computer (these are generally easier to catch).

What Can You Do to Stop Affiliate Marketing Scams?

Putting a stop to fraud should be a top priority for any company running an online marketing campaign. The question is: “what can you do to stop fraud before it hurts your business?”

Many anti-fraud techniques are largely reactionary—only combating fraud after the damage is done. For example, doing a deep dive into your marketing analytics can be an effective and reliable way to identify fraud. However, because of how long a manual review takes, fraudsters might be able to run away with their ill-gotten gains before you can shut them down.

So, to put a stop to affiliate fraud, it’s important to have a solution that can check fraud in real time and identify fake leads before your company pays affiliates for bad traffic. This is where an ad fraud solution like Anura can help.

With Anura’s real-time fraud detection, zero false positive rate, and analytical data collection, you can put a stop to fraud before it can hurt your marketing, prove the source of the fraud, and back up your findings with hard data to resolve any disputes.

Are you ready to make your affiliate marketing campaigns more cost-effective and protect your brand from fraud? Reach out to Anura today!

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