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Online fraud is a reality. The only way to fully avoid it is to not be doing any business online. To be effective, you must learn how to prevent, detect and fight fraud.
This entails understanding the types of fraud that exist and developing strategies to use in your fight. Today, a look at fraud in affiliate marketing.
The Search Engine Journal referred recently to an infographic on affiliate fraud published by AceAffiliates.
AceAffiliates suggest there are six types of "affiliate fraud":
- Duplicating -- creation of deceptive clones of legitimate sites
- Spamming -- sending mass emails under the guise of a legitimate brand
- Squatting -- creating sites under common misspellings of legitimate domains
- Diverting -- creating deceptive links that do not pay the intended affiliate ("cookie stuffing" is one of the ways it's done, and thankfully it already results in serious consequences for cookie stuffers)
- Faking -- inflating a CPC program's number of clicks
- Stealing -- making purchases with stolen credit cards to earn bogus commissions
I'd also add trademark poaching to the list. As for point five, faking, I'd rather see fraudulent leads (which can be basically classified as "stealing") mentioned, not fake clicks. In reality, there are very few affiliates programs out there paying for clicks these days.
As solutions, the infographic creators suggest joining forums which share the information on fraudsters; maintaining blacklists of fraudulent affiliates; closely checking affiliate sites; communicating with affiliates on their tactics; tracking IPs to identify fraudulent locations; and instituting automatic approvals of affiliate applications.
All good suggestions, but unfortunately they only scratch the surface of the work every affiliate program manager should be doing to prevent affiliate fraud.
I believe there are at least nine things merchants and program managers should do to prevent affiliate fraud:
- The affiliate program agreement should clearly spell out what constitutes a valid/commissionable affiliate action (sale, lead, subscription, etc.)
- Always conduct a research on a new affiliate (or a marketing method they use) before approving them into the program. (Do they have an active website? What traffic-generating methods are they planning on employing? Are their methods complimentary or clearly contradictory/detrimental to what you yourself are doing?)
- Watch out for sudden traffic surges
- Same goes for quick increases in affiliate-referred transactions (again, sales, leads, etc.)
- Keep an eye on fraudulent transactions (stolen credit card numbers, fake leads, cancellations of self-referred transactions when commission has already locked, etc) -- two such transactions from the same affiliate should raise a red flag, any three should result in a ban from the program.
- Analyze referral URLs to catch any cyber- or typo-squatters.
- Monitor your brand online to see what customers are saying about it and to catch any spamming affiliates.
- Educate yourself on parasitic and cookie stuffing affiliates (to keep them out of your program). When in doubt, ask in affiliate forums or consult with people like Kellie Stevens of AffiliateFairPlay.com.
- Police and enforce any other restrictions you may have in your program's agreement (e.g. trademark PPC bidding, use of).
Have I missed anything else? Whether you're reading this as an affiliate, merchant, network rep, or a vendor of any affiliate marketing related services, I'd love to hear your thoughts on this important subject.