Affiliate fraud occurs when a fraudulent affiliate marketer fakes an action in order to receive a commission. In the affiliate marketing industry, advertisers (those who are trying to sell a product or service) pay affiliate marketers a commission for every action that the affiliate generates– this could be an ad click, online lead form submission, e-commerce sale, or app install.
Affiliate marketing, part of the performance marketing industry, can be an exceptionally effective model for advertisers since they only pay when a campaign actually performs (i.e., results in leads, sales, or installs). The trouble comes when the actions that the affiliates are being paid for are fake, but real commissions are paid out to fraudsters.
In many cases, the faked actions are generated by bots– specialized scripts often embedded in malware– that direct a computer to visit a site, fill out a form, and even buy a product. Over the years fraudsters, and the bots they use, have become increasingly more sophisticated and possess the ability to closely mimic human behavior. This includes interacting with gaming apps, often going beyond the app install, to also playing the game to a certain level to make the install appear real.
Preventing affiliate fraud
While fraudsters have become more sophisticated, so too has fraud prevention. Here are a few methods to proactively stop fraud before it happens, which prevents wasted time and money dealing with claw backs and credit card charge backs.
Blocking fraud at the click level
At Fraudlogix, we find that our clients have been very successful at blocking fraud at the click level. We essentially enable them to evaluate the quality of web traffic that’s trying to click through an affiliate deal and block fraudulent traffic from converting. In this scenario, the fake affiliate action is blocked before it proceeds to wreak havoc on a campaign.
Our IP Block List has been especially efficient at blocking fraud at the click level. This solution involves using our collective global community intelligence and identifying IP addresses that are high risk (i.e., they are consistently sending non-human traffic to multiple internet destinations). If a client encounters traffic from one of these IPs they can then block it and be confident that any blocked traffic would cause more harm than good. Our IP Blocklist updates hourly and clients can connect via API, ensuring that they always have comprehensive, up-to-date intelligence on the latest threats in the digital ad ecosystem.
Non-technical fraud prevention
While applying a third-party fraud solution is very effective in blocking fraud, here are some tips for preventing fraud that require no technology at all:
- Carefully vet your affiliate partners.
This falls under the guise of knowing who you’re doing business with and where. A trustworthy affiliate should be able to provide you with examples of other monetization projects, current campaigns, and how and where they plan to run your campaign. Check out these 10 things to look for when vetting an affiliate partner.
- Check up on your current affiliates.
Don’t wait months and months to go back and check on your current affiliates. If you’ve on-boarded an affiliate and they’re making deals, check up on the conversion sites and the metrics. If things don’t add up (e.g., high traffic but no conversions, crappy websites, chargebacks, consistent app uninstalls, etc.), dig a little deeper and start asking questions. Don’t wait until the end of the year to begin questioning them – it’s always easier to cut an affiliate off early than to try and claw back commissions after-the-fact.
- Clearly outline what is or is not acceptable in your terms and conditions.
By clearly defining what types of traffic that you will or will not accept in your terms and conditions, it sends the message that you have zero tolerance for fraud. And while it may not deter all fraudsters, it does give you a legal leg to stand on if you do need to claw back affiliate commissions later.
Read more about Fraudlogix’s affiliate fraud solutions and how we can help you to prevent fraud.