Top 3 Things You Need to Know to Stop Affiliate Marketing Fraud

Plus 3 Questions Ad Fraud Solutions Need to Answer

Affiliate marketing is big business. How big? Let’s look at some of the industry numbers:

• Affiliate marketing spend is projected to approach $16 billion in 2024.
• More than 80% of marketers use affiliate marketing.
• Affiliate programs generate up to 30% of sales.
• The average affiliate marketer earns slightly more than $8,000 per month.

As Affiliate Marketing Grows, So Does Affiliate Marketing Fraud

Fraud follows money; where money is being spent and to be made, there are also fraudsters who will find ways to get their share. Unfortunately, that holds true for affiliate marketing. So, here are some more numbers to consider:

• Advertisers lost $125 billion to ad fraud in 2023.
• Affiliate marketing is the second highest percentage source of ad fraud.
• On average, 45% of the traffic generated through affiliate marketing is fraud.

That’s a lot of facts and figures to wade through. The point is this: affiliate marketing is big business with a big fraud problem—and these numbers illustrate that.

Now that your eyes are glazed over and your head is pounding, you likely have a few questions. How does affiliate marketing fraud work? Who does it affect? Can anything be done about it? Let’s stop counting and start answering.

First, How Does Affiliate Marketing Fraud Work?

Advertisers make money when they make a sale. Affiliates make money when their promotion of a brand’s products or services generates clicks, leads, or sales, depending on the arrangement with the advertiser. Affiliate marketers drive traffic in a variety of ways including blogs, videos, emails, and social media posts. While good SEO practices and a loyal audience can drive legitimate visitors, some may try to boost their return with other cheap traffic sources, which are often rife with fraud. Fraudsters will attempt to make money in any number of ways to commit all types of affiliate marketing fraud.

Affiliate Hijacking. Often referred to as URL hijacking, affiliate hijacking is a malicious practice where fraudsters use search engine optimization tactics to redirect traffic, misuse affiliate cookies, or even clone the website of a legitimate, established affiliate. Their aim is to misdirect traffic from their counterfeit page to the authentic website. When an unsuspecting visitor lands on the fabricated page, a cookie is planted into their browser before they're redirected to the actual website. This manipulation enables the fraudster to claim credit for organic traffic that would have naturally reached your site. The phony page URLs typically present slight variations from the genuine website URLs, often mimicking common keyboard typos. For instance, they map intentionally misspell “gossip.com” with only one “s.”

Influencer Marketing Fraud. Marketers and affiliates turn to celebrities—like any member of the Kardashian family—and anyone with a lot of social followers and the power to “influence” buying decisions among their followers. Influencer marketing fraud occurs when an influencer uses bots or other techniques to artificially inflate their engagement with the advertiser. When this happens, advertisers lose what they may be paying the affiliate to partner with them while getting few, if any, conversions.

Sometimes, the influencer isn't even a real person. Just as marketers are using artificial intelligence (AI) to create ads, the technology is also being used to create virtual influencers. While they can be more cost effective for advertisers, they can also damage the relationship with real affiliates and customers who may see brands that use them as less than authentic.

Advertisers always have to worry about how their brand may be affected when an influencer campaign misses the mark or the influencer falls out of favor when they exhibit behavior that is inconsistent with the brand. While it’s not fraud, these instances can cost advertisers sales and put their brand reputation at risk.

In the case of URL hijacking and influencer marketing fraud, both advertisers and affiliates are negatively affected as neither party is aware of what is happening until at least one party realizes things aren’t adding up as expected. But sometimes, the affiliate is the problem.

It is incumbent on businesses to know that the affiliates they partner with are legitimate. Remember, whenever you’re paying someone to do something, cheaters will devise a way to steal money from you.

One way fraudulent affiliates do this is by using stolen credit card numbers to make purchases from your website. They earn commission on the conversions right away, but months later you’re seeing chargebacks. Your business is out the cost of the refund plus the commissions paid via the fraudulent affiliate links, and the fraudsters have long since vanished.

Second, How Can I Protect My Business From Fraudulent Affiliates?

One of the best ways to vet a prospective affiliate marketing partner is to meet them in person, perhaps at an affiliate marketing event. If this isn’t possible, give them a call; if you can never get a live person on the phone, that’s a red flag.

After you’ve contacted them, it’s time to do an online background check. You don’t need cybersecurity experience to do this. Check their social media profiles and connect with them. Make sure their profile photos are real by doing a reverse image search. Schedule a video call to have face-to-face interaction.

When you feel confident both the affiliate and their intentions are genuine, and you’ve discussed how they plan to promote your brand, it’s time to have a conversation about fraud. Let them know you are aware of fraudulent schemes and ask them what processes they have in place to protect themselves and your business. How do they identify and stop invalid traffic? Are the tools they’re using capable of detecting the sophisticated invalid traffic (SIVT) that is a bigger threat to your budget?

You don’t have to rule out smaller affiliates that may not have the budget to use costly third-party tools. Just make sure they are aware of the types of fraud that can occur and ask how they stay on top of their traffic and results. It’s in your best interest to have some type of system in place to protect your campaigns and budget, while it’s in the affiliate’s best interest to make sure they are getting the commissions they earn.

If you’re uncomfortable with any of the answers or just sense something is off, it’s best to move on to another affiliate or affiliate network.

Third, What Else Can Be Done to Prevent Common Affiliate Marketing Scams?

As you can see, affiliate marketing fraudsters don’t discriminate; they target big brands, small businesses, and affiliates alike—even those who are legitimate and have been thoroughly vetted. Fraudsters are also getting more and more sophisticated and are often quicker to use innovative technology to commit fraud than advertisers, and affiliates can use it to prevent fraudulent traffic and activity. Basically, it comes down to this: if you have an affiliate network, there’s your big red flag that you likely have affiliate marketing fraud!

An ad fraud solution provides an enterprise layer of security of protection against fraud by identifying invalid traffic and stopping it before it can negatively affect your budget, your reputation, and your affiliate partnerships. When choosing an ad fraud solution, there are three important questions to ask:

• Do you check incoming traffic in real time? When it comes to ad fraud, time is money. Waiting for a review of web traffic gives fraudsters the opportunity to act and get paid while delaying or even diverting payment to your honest affiliates.
• Do you check multiple data points? Simply verifying an IP address is not enough. A thorough ad fraud solution looks at numerous data points to not only detect and stop invalid traffic but also verify real visitors so advertisers don’t miss out on conversions and affiliates earn rightful commissions.
• Do you show your work? Whether it’s to protect their process or prevent their customers from being overwhelmed with too much information, some ad fraud solutions show little to no data to support why they have marked a visitor as fraudulent. It’s important for you to have access to all the data behind the decision to flag fraudulent activity. This can help you get to the root of the problem with the affiliate, giving them the chance to correct it, or let you know if the problem lies with the affiliate themselves. Anura has perfected how to present the information you need to feel confident without overwhelming you or leading you to get lost in the weeds. 

The answers to these questions can help you choose an ad fraud solution that is fast, accurate, thorough, and data-driven—and committed to using all the tools available to help you fight and prevent fraud.

We welcome the opportunity to answer these questions and more about affiliate marketing fraud. Let us show you how Anura can help prevent fraud and provide the data and insights you need to improve your affiliate marketing program.