In the industry that boasts high levels of transparency is still suffering from the people who, tempted by the vision of easy money, try to game the system and get paid for fake results.
What constitutes an affiliate fraud? How do affiliates commit fraud?
Fraud is a very broad term, it encompasses all the deceitful ways when the conversions/clicks/impressions are generated. In a perfect world affiliates would promote the offers to their website’s audience and get a commission for every lead or sale generated. Unfortunately, many are tempted to game the system. The cheaters might uses a whole array of tools to do so. For example, the publisher might do the conversion himself, he might have others fill in the fields with real-looking data or might go as far as committing identity theft - fill in the personal information of a real person without her knowledge. Other affiliates might use bots, trojans and malware to generate fake clicks and conversion.
Why is fraud dangerous?
When fraud occurs the advertiser might cancel the offer as it’s not profitable for him or lower the payout, which affects all affiliates, even the legitimate ones. Having just one fraudulent affiliate among all the others generating legitimate conversion might hurt the ROI of the merchant who in turn could lower the payout for everybody.
Networks face the risk of the advertiser’s monthly reversals even after payments for fraudulent leads have been sent to their affiliate partners. This might in many cases results in significant financial loss. Moreover, longer term risks such as loss of the campaign or even loss of the advertiser all pose a serious threat to the profitability of the entire business.
Fraud is putting in danger the whole system, because the merchants need to trust that affiliate marketing would bring them real results for their business, otherwise they wouldn’t be interested in having an affiliate program in the first place.
How can you protect yourself against fraud?
Even though there are many technological ways to verify leads, affiliate marketing is very much based on trust between the affiliates, networks and merchants. What it most important is to verify every affiliate to make sure that they are a legitimate business. A simple phone call made by the account manager can do better then even most complex automatic validation services.
Secondly, it’s important to validate the methods of promotion to make sure that they are allowed and complimentary to the campaign the affiliate wants to join.
In order to avoid fraud it is also very important to state clearly what constitutes a conversion and what the allowed methods of promotion are, so that there’s no space left for any doubt.
Lastly, it’s important to keep track of the data, check where the conversions are coming from and what the conversion rates are and look out for anything that seems suspicious. For example, 80% - 100% conversion rates might look great at first glance, but almost exclusively happen in cases of fraud. Sudden spikes in conversions should also be an alarming signal to investigate it further.
Fraudsters are getting smarter all the time so it’s also important to stay on top of all the developments in the field to be able to detect partners doing their best to game the system.