Fighting Fraud in Your Affiliate Program

Fraudster will always exist in affiliate marketing. But there are steps you can take as an affiliate manager to minimize any bad activity in your program. You don’t want to be paying out commissions that have not been legitimately earned. Running a clean program is important to your customers, your brand, and being able to keep your hard-working, ethical affiliates.

Affiliate fraud is typically defined as an illegal activity designed with the intention of cheating merchants, other affiliates or buyers. These bad practices include spamming, typo-squatting, sending fake leads, creating deceptive links that do not pay the affiliate who legitimately earned the commission, cookie stuffing, and diverting links from legit affiliates, trademark poaching, using stolen credit cards, and clicks on CPC (cost-per-click) links using software that simulates human clicks.

Those perpetrating fraud and scams are savvy and always shifting to exploit holes. In addition, so much of fraud is difficult to detect because these bad affiliates hide behind links that are redirected and masked via IP proxy servers.

Here are some ways to fight fraud:

Know Your Affiliates

This might seem like a time consuming and tedious process, but in the end it can save your business a lot of money. This can mean manually approving each affiliate. Thoroughly check out each applicant’s website to know if they are legitimate. Also be sure to double-check on key information such as address, phone number, etc. Many affiliate managers also review the potential affiliate’s social security number and TaxID.

Other managers call the phone number given, just to see if it is legit. Be warned that if an affiliate doesn’t want you to be able to easily contact them, something is amiss. While some affiliates just want to be left alone, there is a difference between those seeking minimal communication and those trying to hide from you. After all you are going to be entering a business relationship with this affiliate and sending them money. You have a right to know who they are and have the ability to contact them if there is a problem.

If you can reach them (via phone or email) inquire about the traffic generated method they plan on using and make sure those tactics are in line with your business goals.

Educate Affiliate on Ethical Practices

Take the time to let newer affiliate know about ethical practices. Perhaps, you can show them using data or case studies that in the long run, ethical affiliates are making more money. Communication is key. Work with affiliates and discuss business strategies and tactics. This relationship building will help insure they are doing things in an ethical and above board manner.

Have Clear Terms of Service

Make sure to explicitly spell out your policies on exactly what constitutes a commissionable affiliate action such as a sale, lead, or subscription.

You must have a Terms of Service (ToS) contract with an affiliate that leaves no room for debate. You don’t want affiliates coming back to you with an excuse that something was a grey area. That could be a costly mistake for your company.

Monitor and Track Everything

You’ll need to analyze and scrutinize your reports and activity logs. Double-check referring URLs to find typo-squatters. Look for unusual patterns. If something seems out of whack – investigate. Don’t ignore it. Keep an eye out for sudden traffic surges, rapid growth in specific affiliate referred sales or leads. The biggest mistake is to think that suddenly an affiliate can go from making $100 a month to $30,000 with something being up. It’s likely that affiliate figured out a way to skirt the system or is bring in leads that aren’t valid. And while you’d love to have the additional leads or sales from that affiliate, they are likely fraudulent and will end up costing you in the end. Don’t let inflated numbers get the best of you. Watch for fraudulent transactions such as fake leads, stolen credit card numbers and the affiliates cancelling their own transactions once the commission has already been locked in.

Enforce the rules

Enforcement goes hand-in-hand with monitoring. If you don’t allow bidding on specific keyword, then you need to ensure that it is not taking place. There are crafty affiliates that will do it using dayparting assuming that if you are located in another time zone you won’t find out. You need to monitor and then make sure no one is breaking your ToS.

And while, it’s ok to give an affiliate a second chance if you think they were doing something wrong the first time out of inexperience or lack of communication or because it was unclear to them; it is not okay for that same affiliate to commit the same violation a second time. Claiming naiveté only works once. Some bad affiliates will use the same excuse over and over “I didn’t know I wasn’t supposed to do that”. There shouldn’t be a third violation of your terms. If it happens twice, they are trying to pull something over on you. That’s the time to kick them out of the program.

Keep a list of Bad Affiliates

Maintain your own list of known fraudsters, those declined from your program and why and those kicked out. This will help you if they reapply (and they will). You’ll have some key information, so that even if they attempt to get into your program using a different website, IP or other information, you should be able to figure out who they are. You can also participate in various industry forums that often share information on affiliate using bad practices. This can be a great source for knowing which affiliates have been kicked out of other programs.