4 Ways to Prevent Fraud in Your Affiliate Program

An unfortunate reality in the highly competitive world of performance marketing is that there will always be a few unsavory individuals who try and skirt the system. This is why affiliate managers – both in-house and outsourced – need to be vigilant in monitoring for it.

Why and how fraud occurs:

The term “fraud” is quite broad in affiliate marketing. Essentially, it encompasses any activity that violates a company’s affiliate terms and conditions, including any unethical or unscrupulous behavior by affiliates. If not regularly monitored, fraudulent activity can negatively impact the ROI of an advertiser’s affiliate program.

The potential for easy-money incentivizes unethical groups and individuals to try and find loopholes in a company’s affiliate terms and conditions and undermine existing fraud-prevention tools that you or your affiliate network have in place.

There are many ways these individuals try to scam your affiliate program for their monetary gain, including sending you fake leads, bidding on your trademark terms, diverting and hiding links, using stolen credit cards, and more.

Preventing fraud in your affiliate program

Here are four simple, yet highly effective things you can do to protect your affiliate program from fraud:

1.  Update your Terms and Conditions.

Keeping your affiliate terms and conditions updated helps prevents affiliates from finding loopholes in your affiliate agreement and legally exploiting them. For example, a common issue is that some advertisers don’t explicitly forbid trademark bidding, which makes them easy targets. Unscrupulous affiliates will set up Google AdWords campaign and bid on their trademark terms (including misspelled trademark terms). In turn, the affiliate will generate considerable commissions on the company’s hard-earned branding efforts as well as increase paid search costs for the company.

2.  Enforce your new Terms and Conditions.

When you update your affiliate terms and conditions it is important to send an email out to all of your affiliates announcing the changes to your terms. Be sure to include a due date for when affiliates need to bring their promotional efforts in compliance with your updated terms. This will ensure that honest, brand-aligned affiliates have the opportunity to comply with your new terms and have the time to update their campaigns.

Once the due date has passed, enforce your new terms rigorously. You can also use a brand monitoring tool, such as BrandVerity, to assist you in your fraud monitoring efforts.

3.  Using data to spot fraud.

The most powerful fraud detection tool you have at your disposal is your data. Here are a few places to check your data for potential fraud:

  • Referring URLs: Use your data to look through referring URL’s and visit suspicious pages you don’t recognize. If you notice several redirects, it could mean an affiliate is trying to hide the real source of traffic from you. Some affiliates also own multiple websites, but may only apply to your program using one of their websites. If a virtuous affiliate has a quality network of websites, it can mean more quality traffic, leads and sales for your business. However, if the affiliate is unethical, it may mean that they are using their quality site to apply to your program and then a second site to actually send fraudulent traffic to you.
  • Sub-affiliate networks: If you work with sub-affiliate networks (e.g. Skimlinks, Viglink, etc.), this can add another layer of complexity to your fraud detection efforts. On one hand, these networks can give your program a tremendous boost by giving you access to thousands of additional affiliates. On the other hand, it may mean less control over the quality of affiliates in your program. When working with sub-affiliate networks, it’s recommended that you:
    • Look at your referring URLs to determine the original source of the lead or sale.
    • Be vigilant about working only with sub-affiliate networks who are transparent and will give you clear visibility into which sub-affiliates are driving traffic and how– especially through referring URLs.
    • Work with sub-affiliate networks who will be willing to prevent sub-affiliates who have been removed from your program from being able to promote your brand.
    • Ask to review all sub-affiliates before they are approved into your program and then black list and white list affiliates according to brand guidelines.
  • IP addresses: Monitor all of the IP addresses for your sales and leads. Do multiple transactions come from one single IP address? This could mean that someone is placing multiple orders with stolen credit cards, trying to distribute and sell your goods overseas, or engaging in some other illicit activity. If you can, try to authenticate these transactions to determine their validity.
  • Historical transactions: Another good way to spot fraud is by identifying trends. If you notice an abnormal spike in clicks, sales or leads from an otherwise low-performing affiliate, it could mean something dubious is going on.

4.  Create a routine

Once you have your affiliate terms and conditions updated and you’re familiar with how to check for fraud in your program, it’s important to create a routine to keep your affiliate program in check. Set aside time one day each week to go through your data and fraud monitoring tools to ensure affiliate compliance.

If you do find fraud in any form, be prepared to take action. Document the evidence and send the affiliate a violation warning. The affiliate may be non-compliant due to a glitch or innocent error and will need time to correct the issue. But if the issue reoccurs or the affiliate is caught in another fraud attempt, it’s essential to terminate that affiliate from your program.

Fraud exists in affiliate marketing just as it does in paid and SEO marketing. With that said, it’s important to remember that most affiliates approach their marketing efforts with integrity and genuine enthusiasm for the brands they promote. There’s no reason to let a few bad apples dictate the performance of your affiliate program. The best way to prevent fraud in your affiliate program is to work with an experienced, professional team who will help you recruit and engage high-quality, brand-aligned affiliates. If you have a management system in place to properly monitor and screen affiliates, you are far less likely to experience fraud or off-brand promotions in your program.

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