Affiliate Marketing

Fight Against Online Affiliate Fraud

The emergence and rise of the Internet has brought new opportunities for businesses, allowing them to reach new market segments and niches that would have been intangible otherwise. To a certain extent, the power of online businesses comes from affiliate marketing.

Affiliate Marketing has been around for the last 10 or so years, but merchants are nowadays confronted with one of the newest types of scams, namely known as affiliate fraud. As affiliate fraud happens mostly because there is money involved, it's a sure sign it will never stop.

While Affiliate Networks have the technology and know-how to fight affiliate fraud, individual merchants might not be aware of the phenomenon. Here are my 2 cents.

What is Affiliate Fraud?

Affiliate fraud is any type of illegal activity designed with the intention of cheating merchants, other affiliates or buyers. The merchants are at a loss by fraud affiliates that mislead them into paying commissions that they shouldn't be paying.

The extent of such practices ranges from repeated clicks on income-generating links of CPC (cost-per-click) programs to using sophisticated software that will simulate human activity.
Affiliates take loses due to black hat affiliates that redirect the sale to a parasite site and cash the commission that this way never gets to the rightful, hard working affiliate. There are more parasite techniques described in the next chapter.

Buyers are affected by spam, deceiving marketing techniques or by being miss-informed about the product/service they need. The negative effects are obvious for both individual merchants and Affiliate Networks. Affiliate marketing networks face the much dreaded peril of losing their members (i.e. merchants), who will no longer want to become involved in affiliate programs for fear of having to face affiliate fraud, which also translates into merchants losing their customers.

How to Recognize Affiliate Fraud and What to Do About it

If you already have an affiliate program set up and working, and you notice that things are not going the way you hoped they would, maybe it's time to do your homework and make some research. Here are some symptoms specific to affiliate fraud. They may actually help you with the detection of online fraud. Check your activity logs (together with your specialized personnel) and look for anything that looks suspicious, any unusual pattern.

On the other hand, if you outsource your affiliate marketing to an affiliate network, they do most of the work to fight and eliminate fraud, meaning you are safe. Affiliate fraud takes several forms, among which the best known are:

• Use Spamming techniques to promote products
  Spam mail is something that we all hate. There are affiliates that will send tons and tons of bulk spam e-mails to customers, hoping that this will increase their income. Of course, those e-mails will end up being erased, but bear in mind that not only will your advertised products not become known, but there's also a great chance to have your name (and your products) associated with such practices, thus leading to a loss of credibility and, ultimately, of conversions. Affiliate Networks strictly forbid spam and take drastic measures against spamming affiliates, including having their account banned and commission blocked.


• Using (typo) variation of the vendor's domain
  This is a technique that refers to the act or registering multiple (typo) variations of the vendor successful domain name, and then signing up all those variations for one (or more) particular merchant's affiliate program. Fraudsters place their bets on un-aware buyers that will not make a difference between the original vendor site and the black hat affiliate site, because usually the difference is a wrong or missing letter in the domain name.
  
  As this technique is not based on creating added value but on taking advantage of un-aware buyers, they steal visitors and sales that should have actually been the merchant own traffic, thus resulting in losses for the said merchants. Affiliate networks have a set of quality requirements when accepting new affiliates. Chances are that such affiliate sites will not pass the filters.


• Fake clicks or referrals
  There are many computer savvy fraudsters that are able to create scripts or software that imitate human behavior, and generate false clicks or transactions. The less complicated version of this type of fraud is actually clicking repeatedly on CPC links. Affiliate networks fight back by investing lots of money and technology into identifying automated behavior patterns and eliminating fake clicks and referrals.


• Forcing affiliates to do a specific action
  I'm constantly amazed about the ways black hat affiliates are trying to trick and force visitors into doing something that will bring them commissions. Here is a nice story of "Click on the banner to get your access to my server" scam discovered by Affiliate Marketing Veteran Shawn Collins (scroll down to the No More Teachers, No More Books section).


• Illegal transactions with stolen cards
  Some people will go as far as making purchases using stolen credit cards or register using fake identification information. The purchases turn later in refunds and chargeback, but the merchants have already paid the affiliate commission. Usually of the transactions are screened by affiliate networks. They check the card numbers, IP's and everything else,. They also have huge databases of fraud transactions that they built over the years


• Parasite sites and traffic diverting
  This term refers to any technique that diverts the traffic from the legitimate affiliate to the fraudster's site. The most notable negative result is that the real hard working affiliates don't receive their commissions, and they quit the affiliate program. Thus, merchants lose their coverage of particular niches and, consequently, many prospects.
  
  Just to give an example, black hat affiliates replace buy links in the products PAD files with their own links then they submit the modified PADs to download portals. The visitor will be redirected to the black hat affiliate site to make the purchase instead of the real vendor site. Affiliate Networks have complex tracking mechanism to verify un-usual buying patterns and have a special attention to eliminate parasite sites as they affect the real affiliates by stealing their commissions.


• Copying legitimate affiliate's sites and content
  Here we're talking about fraudsters that copy (you can even read "clone") the style and content of popular sites and thus mislead honest prospects, confusing them and directing traffic towards the wrong site, where conversions finally take place. The merchant thus loses relevant traffic and income.

Tips on Preventing Affiliate Fraud

If you don't outsource your affiliate marketing to an affiliate network, you can use some of the most common screening techniques in place, such as:

• checking if the affiliate has an active Web site
• checking if the site's content relates to what you're selling
• checking if the affiliate's site is optimized accordingly for the above mentioned content
• keeping in touch regularly with the affiliate.

If you have a CPC campaign in place, make sure you include some anti-fraud features, suck as cookies that can detect if a link was clicked on more than once from the same IP in a short interval. Such cookies will provide you with enough information to allow you to single out and eliminate unwanted fraudsters.

Even if it is more time consuming, you can go for manual approval of all the affiliate applications. This will allow you to review all the data provided by the applicants and immediately spot the "rotten apple" in the basket. You can even go as far as giving each applicant a phone call to see it they are real and if they mean business.

After carefully "trimming" the list of affiliate applicants, sort out the bad ones and add them to a red-flagged database for future reference. You never know when it may come in handy.
Also, join forums where you can discuss with fellow merchants various ways of putting into place anti-fraud affiliate programs, share opinions, filtering techniques, black list of fraudsters' URLs, IDs, etc. Communication is of utmost importance in this particular business.

Conclusion

Fraud prevention is not an easy task. But, by continuously monitoring your affiliates, it is possible to keep them on a "short leash". It is important that you pay attention to the smallest details and signs that show that something is going wrong. Do everything in your power to protect yourself, and share your results and opinions on specialized forums that deal with the detection and prevention of online fraud.

Don't forget that by protecting yourself you protect your fellow merchants and the entire industry of affiliate marketing. If you outsource your affiliates business to an affiliate network, then you should be ok. Still, keep in mind to check your provider and always choose the right one.

If you liked this article, please subscribe to our
Articles & Interviews RSS Feed .

You can also bookmark and share this article:

Your Name *:
Email *: (will not be published)
Website:	Ex: http://www.google.com .
Your comment *:	Plain text only.
Validation Code *:	Type in the number above.
Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.

Link to this article from your site or blog. Just copy and paste from this box:
<a href="http://www.avangate.com/articles/affiliate-fraud-97.htm">How to Prevent Affiliate Fraud</a>