Affiliate fraud is a type of advertising fraud that involves any false or corrupt activity executed to collect commissions from an affiliate marketing program fraudulently. It’s estimated that 2% of all affiliate transactions are attributed to fraud. Unfortunately, fraudsters are continuously finding new ways to scam the system and cheat merchants out of profits.
The profit and success of 98% of legitimate affiliate marketing is a sizable contributor to ecommerce and lead generation across the web. According to 99 Firms, 15% of digital media advertising revenue can be attributed to affiliate marketing. So as a business, you can’t ignore its success, but you should know about some of the dangers of affiliate marketing and how to prevent it.
What types of affiliate fraud are there?
Affiliate marketing, or performance marketing, is the type of marketing where a publisher promotes a merchant’s products (or services), generates sales for those products, and in return receives a commission. This allows companies to only pay marketers if they’re successful, one of the many benefits of affiliate marketing.
Affiliate abuse and fraud can take the form of whatever the goal of a given performance marketing campaign The most common types of affiliate fraud include:
- Lead fraud: Fake or unqualified leads are generated and submitted.
- Click fraud: Artificially inflating or generating click on a link.
- Install fraud: Illegitimate methods are used to attain app installs.
- Sales fraud: Falsifying sales or using unethical tactics to increase commissions.
- Impression fraud: Manipulating ad impressions attributed to an affiliate.
All of these affiliate scams are illegal and cost businesses marketing dollars. Publishers and affiliate managers often use strict terms and conditions to prevent affiliates from gaming the system yet it still happens. Let’s take a look at how this happens.
How do affiliates commit fraud?
Because affiliate marketers rely on software platforms to manage their programs and those platforms are made by humans, some scammer affiliates can find vulnerabilities that allow them to exploit the system. Affiliates are creative when it comes to committing affiliate fraud. Below are some common methods:
- Faking a conversion
Whether it’s a click, a completed lead form, an app install, or even a sale, much of affiliate fraud revolves around affiliates faking a conversion to collect the commission. This is often done with the use of bots, but can also be done manually by humans, most often in click farms. - Duplicating content from another affiliate
Affiliate publishers are paid for conversions that their original content produces, so nefarious affiliates may simply scrape the sites of legitimate publishers and re-publish original content in a bid to divert traffic to their sites and then take credit for any conversions. - Click stuffing
This often happens around install fraud and involves an affiliate simulating clicks on ads (often with the use of bots) unbeknownst to a user. So, if the user then installs an app organically, the affiliate company will still get a commission even though their ‘marketing’ efforts had nothing to do with the user installing the app.
Negative effects of affiliate fraud
The vast majority of affiliate marketing is a legitimate marketing and sales methodology. However, as an affiliate manager/publisher/merchant you need to be aware of all the different ways that affiliates can cheat the system. There is a direct cost of affiliate fraud (it eats into your profits and depletes your marketing budgets), but there are other not-so-obvious effects of affiliate fraud.
How to protect against affiliate fraud
At Fraudlogix, we understand the complex landscape of affiliate fraud and offer tailored solutions to combat it effectively. Here’s how you can shield your platform and campaigns:
- Rigorous Affiliate Validation: Before admitting affiliates into your program, conduct thorough screenings. This not only ensures that you collaborate with compliant and trustworthy partners but also safeguards your network from potential fraudsters.
- Continuous Monitoring and Tracking: Once affiliates are onboarded, maintaining vigilance is key. Our advanced tracking tools provide real-time insights into affiliate activities, helping you detect any irregular patterns or discrepancies quickly. This continuous monitoring ensures that you can act swiftly to mitigate any potential threats to your campaign.
- Advanced Fraud Detection Technology: As your affiliate network grows, manual monitoring becomes less feasible. Fraudlogix offers cutting-edge fraud detection software integrated into your affiliate management systems. This technology uses sophisticated algorithms to identify and prevent fraudulent activities, from bot traffic to sophisticated schemes and lead fraud.
By partnering with Fraudlogix, you gain access to comprehensive solutions that protect your campaigns from fraud. Contact us today to learn more about our affiliate fraud detection and prevention tools or to request a demo. Together, we can build a secure, transparent, and profitable affiliate marketing environment.
