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affiliate fraud explained featured
Security

Affiliate fraud explained

Adriána Imrichová

Adriána Imrichová

Last modified on August 13, 2021 at 3:25 pm

Affiliate marketing comes with several benefits

For businesses, it’s an excellent method to build a following around your brand for a low cost. And since you pay only when you see visible results of your marketers’ work, the risk of losing money on it should be low. Your marketers are also motivated to work hard because the more people click on their links, the more money they will get. And what’s even better, their video channel or blog can earn them money while sleeping or being on holiday.

Not everyone wants to spend their time creating content or interacting with their audience, though. Unfortunately, some “marketers” are looking for a quick buck at the expense of affiliate program owners. In one piece of research on affiliate fraud cases, CHEQ and the University of Baltimore found that affiliate marketing fraud cost advertisers $1.4 billion in 2020 alone!

That’s why securing your own program from dishonest marketers and cybercriminals should be a priority. But do you know what exactly affiliate fraud is and how to prevent it from hurting your program? If not, stay tuned – in a moment, we’ll discuss what affiliate fraud is, how to spot suspicious activity in your program, and how you can protect it from cybercriminals.

What is affiliate fraud?

Affiliate fraud is any deceptive, misleading behavior that does not follow your program’s rules. Whether it’s using illegally gained user data to create new “leads”, taking credit for “purchases” made with counterfeit credit cards, or employing bots to boost clicks or traffic. All of those actions have one thing in common – the fraudster responsible wants to earn as much as possible in the short window they have before getting caught.

To know how you can stop them in their tracks, first, you need to understand what fraudulent methods are the “most popular” among criminals.

Affiliate fraud explained

How are cybercriminals committing fraud?

What is incredibly worrying now is that affiliate fraudsters have several tricks up their sleeves thanks to new tools. What’s more, they keep finding new ways to scam companies out of their money. But most of these cyber criminals still use either one or more of the “tried and tested” fraudulent methods. So let’s have a look at some of them.

Using bots to create fake traffic or clicks

In 2020, 37.2% of all internet users’ “activities” were made by bots, with 20% being malicious. Those tiny programs called bots can mimic real users’ behavior to generate fake clicks, followers, or even leads. This way, they can be used by “social media influencers” to inflate their numbers of followers and likes. All aimed to make it look like they have hundreds of clicks on their affiliate links. Bots can even be created to fill in and submit lead generation forms or download and “use” apps!

And since the owners of such bots make sure to hide their location and activities, it might take a while for a company to notice they are losing money on worthless traffic or clicks.

Faking location using VPN

To cover their tracks, the vast majority of cybercriminals use proxies and VPN services. But that’s not the only reason for doing so – some affiliates might also be using VPNs to “send traffic” from countries that pay better. Affiliate companies give different commission rates depending on which country the traffic comes from. And fraudsters will frequently take advantage of that.

With a VPN, a fraudulent marketer can mislead a company into thinking that they have new visitors from the countries they are most interested in and pay the referring affiliates accordingly – the problem being that those visitors do not actually exist.

Misleading content or incentives

You have no doubt come across a YouTube video where the thumbnail or description promised far more than the actual content delivered, or an ad with a very tempting offer that, after clicking on the website, turned out to be not worth it at all.

For this type of fraud, the actual content of the video or website doesn’t matter – as long as someone clicks on the video or the ad, the fraudsters get what they want. Moreover, they will get paid for clicks even if visitors leave the page after a few seconds.

But fraudsters can get even more insidious and lure people into purchasing products or completing specific actions, promising them “exclusive” rewards. And obviously, they won’t ever be seen by the victims. Once they realize that they have been scammed, they will likely demand refunds from the affiliate program owners. But business owners may not even know what methods their “affiliates” used to drive the purchases in the first place!

Cookie stuffing

How does an affiliate program owner know whether or not an affiliate fulfilled the conditions to earn commission? By tracking cookies (tiny text files in an internet’s user browser that websites can read). In theory, they allow program owners to reward exactly the affiliates who deserve it. But if an affiliate fraudster uses a cookie stuffing method, they are instead rewarded for “bringing traffic” to the program.

How does it work? Through a website, pop-up, or browser extension, the fraudsters drop one or more third-party cookies into a visitor’s web browser. If a user happens to visit one of the sites from which the cookie originates and makes a purchase, the cookie will mislead the advertiser into thinking that lead was brought by the fraudster.

What’s even worse is that the dropped cookies can override those coming from legitimate affiliates, allowing fraudsters to take credit for someone else’s hard work. This means your affiliates may earn far and therefore might consider leaving the program altogether.

cookies-with-goggly-eyes

How to find out whether you have been a victim of affiliate fraud?

An occurrence of affiliate fraud can be obvious in hindsight – if you call a lead and only get an angry “where do you have my number from?” reply, or you notice there are some suspicious failed sales in your records, for example. But what other things happening in your program should raise a red flag?

  • You don’t see any actual activity inside your app, or it stops suddenly. If you have hundreds of app installs, but there’s little to no activity within it, then there’s a chance that the installations are mostly coming from bots. If you notice any suspicious activity patterns (such as the app being uninstalled multiple times after exactly the same number of days), then you can be almost sure that bots are responsible.
  • Suspiciously good results of one or more of your affiliates. You surely have “top performers” in your program that bring the most traffic or sales to your page. But if their results are unnaturally great, such as having a far greater conversion rate than your average or seeming to hit all campaign goals in a much shorter time than others, you should certainly take a closer look at them.
  • You’re getting a ton of traffic, but no conversions – thousands of clicks or app installs might seem like a sign that a campaign is doing well, but so-called “vanity metrics” can be easily manipulated and so you shouldn’t focus only on those. Instead, it’s a good idea to always compare the number of clicks or views related to conversion or the number of active leads. If they don’t match, then something is amiss.
  • There’s a sudden increase in refunds or chargeback demands. Some affiliate fraudsters might go as far as to fake sales with stolen credit card data to earn commission. Once you reward them, you might find out that the payment for their sale didn’t go through or that you receive a demand for a chargeback. If you have only one or two such issues, then there’s no need to worry, but several and in a short time or coming from the same affiliate? You should investigate this immediately.

How can you stop affiliate fraud from harming your business?

Stopping affiliate fraudsters in their tracks might sound like a pretty tricky thing to do, especially when they keep on coming up with new methods and tools. But there’s a couple of things you can do to make sure your program is safe.

The first is to vet your potential affiliates before hiring them. Besides having an active blog or video channel where they publish regularly, a legitimate affiliate should also match your brand and your products. Let’s suppose there’s anything that raises suspicion, such as their social media account being very young but already having thousands of followers. In that case, you should take a closer look at the affiliate to reduce the risk of hiring a fraudster.

And even if they pass the initial screening, you must tell them about your terms and conditions, including actions that violate your program’s rules together with how you will respond to such violations. And if you have a team of affiliates already working for you, keep an eye on their activity and results. If some things seem suspicious, then don’t leave the matter to solve itself but rather start asking questions.

Try as you might, though; it’s unlikely that you’ll be able to keep track of everything – especially if you have several marketers to take care of. So here’s where Post Affiliate Pro can help to protect your affiliate program further from any suspicious activity. The platform can monitor all actions and transactions generated in your program and automatically block all suspicious behavior like multiple clicks, sign-ups, or duplicate orders and then decline commissions for those.

To protect your program from bots, meanwhile, you can create a blacklist of suspicious IP addresses and countries. We would recommend you block all traffic coming from countries with high bot traffic rates. That way, Post Affiliate Pro won’t count any actions coming from those locations. Besides protecting you from losing money on illegally earned commission fees, this will also keep your metrics clear as they won’t be affected by unreliable data coming from suspicious activities.

Conclusion

Fraud attempts of any kind are harmful both to program owners, affiliates, and regular people as well. Besides hurting them financially, fraud also damages people’s trust in the industry and might also scare them away from trying affiliate marketing. But the good news is that you have plenty of ways to protect your online business from fraudsters and affiliate scammers. The more you know about their methods, the greater the chance you’ll avoid having any trouble with fraudsters.

Post Affiliate Pro is ready to help with securing your program as well. So if you want to talk about how you can use our platform to protect your affiliate program, why not reach out to us?

Adriána Imrichová

Adriána Imrichová

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