6 Types Of Affiliate Fraud And How To Combat It

The rise of the internet has created a large number of opportunities, for both individuals and companies, to prosper by tapping into new markets and attracting new consumers who may otherwise have been unreachable by them. One of the primary ways in which a business can enhance it’s reach is through the use of affiliate marketing.

Of course, whenever money is involved, there will be a select few who aim to defraud the system and affiliate marketing is no exception.

There are 6 common types of affiliate fraud –

The copying of genuine affiliate site’s content
Spamming
Domain squatting
Parasites and traffic diversion
Fake clicks and referrals
Stolen credit cards

What exactly is affiliate fraud?

Affiliate fraud covers affiliates, buyers and merchants.

Affiliates can lose commissions that are rightfully theirs when their sales are diverted away their site and onto a parasite via black hat methods.

Buyers are at risk from affiliate fraud either through being mis-sold or other deceptive marketing tricks. Additionally, there is the ever present problem of spam.

Merchants stand to lose out when affiliates cheat them through obtaining payments for fake or useless referrals. This can be from generated multiple clicks on cost per click programs.

The negative effects

For merchants there is the direct cost of paying commissions that are unwarranted. Worse still, is the fact that they will have lost customers and so generate no revenue from the commissions they have paid out.

Equally, affiliates will not want to do business with particular merchants if they are not going to receive payment for their efforts.

Finally, buyers may find themselves purchasing sub-standard products or services, or being completely misled about a product’s usefulness, when purchasing from a rogue merchant that has hijacked a sale.

Affiliate fraud in detail

I’ve already said that there are 6 common types of affiliate fraud. There are many other ways that affiliates, merchants or buyers can be ripped off but these are the main and most often seen possibilities in detail –

The copying of genuine affiliate site’s content

In this instance, the scam is that a legitimate site is copied, or even completely cloned, so as to appear to be a popular and well respected site. the copying will often involve the duplication not only of the content but also the styling too. This confuses potential buyers into making purchases at the wrong site, thus depriving the genuine merchant of the sale.

Spamming

Spam email may be the number one scourge of the internet age we live in. Whilst most people will delete such rubbish without a second thought, there are a few who will react to it and make purchases, hence it’s continuation. When buyers purchase from spammers not only are they perpetuating the problem but they are depriving ethical merchants from their income. Also, for the majority of consumers who see spam and delete it, the re-occurrence of a particular product, brand or company within them can cause damage to the legitimate company by association.

Domain squatting

With domain squatting a fraudster will find a successful merchant site and then register many domain names that are close variations of it, i.e., with one letter missing or by using a common misspelling. When prospects visit the site through their accidental typo they are greeted with what looks like the genuine site and may make a purchase there, again diverting sales from the original merchant.

Parasites and traffic diversion

Parasites divert traffic from an affiliate’s site, thus bypassing the intended merchant. In simple terms, this is achieved by creating fake affiliate links on sites where affiliates look for products or services to promote.

When the buyer clicks on the affiliate’s link they are taken to a faux site which takes their money for the intended product or service but does not credit the affiliate with their commission.

Fake clicks and referrals

Possibly the most well known affiliate scam is click fraud. This can be something as simple as repeatedly clicking on a link that pays out based on CPC (cost per click). Such actions drain funds from merchants without yielding any results whatsoever. It might be perpetrated by either greedy affiliates looking to inflate their income or by competitors looking to directly harm a merchant in the pocket.

Stolen credit cards

Stolen credit cards pose a big problem. Merchants generally pay commissions at the time of the sale or quite soon after. When they later find that the transaction was completed with a stolen credit card it is too late to recoup that commission. Additionally, they may then also face a chargeback as well as bank fees.

Solutions

Preventing affiliate fraud is far from easy as it takes many different forms and those behind it certainly tend to know what they are doing and how to remain undetected for long periods of time.

Some of the easiest steps you can take, as a merchant, to minimise your exposure to such fraud include –

  • joining forums that share fraudster’s details
  • maintaining your own blacklist for future reference
  • checking that prospective affiliates actually have a web site and that it’s content is related
  • regular communication with your affiliates
  • enablement of cookies to track clicks so that click fraud can be identified when the same ip is used multiple times
  • manual approval system for new affiliates

Conclusion

Affiliate fraud is hard to spot and hard to prevent. The best course of action is to minimise your risk, whether you be a merchant, affiliate or buyer.

Merchants can follow the steps above, affiliates should check who they are dealing with and verify that links point to the intended site(s). Buyers should verify that they are on the site that they expect to be on, and that the domain name is correctly spelled, before making a purchase.

Despite some of the doom and gloom above, affiliate marketing is still a good means of gaining exposure and sales for merchants. Affiliates can and do make a lot of money. Just look at someone like Zac Johnson, a well known super affiliate.

Remember to do your research and communicate at all times and affiliate fraud will be a minor inconvenience to you rather than a major headache.

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

Comments

  1. Mark Nolan says:

    This is a great post about affiliate fraud and I think that you are right that it can not be eliminated but can be easily controlled.

  2. A little off topic, but thought you might enjoy this

    http://www.comics.com/creators/wizardofid/archive/wizardofid-20070915.html

    Didn’t know where else to throw it!

    jb

  3. Thanks for explaining what domain squatting is as I have heard of it but never quite knew what it was.

  4. Hi,

    I really enjoyed your post, in particular the point about stolen credit cards being used to generate affiliate payments.

    My card was cloned and the person(s) were buying lots of on-line goods, in the knowledge that they could not be delivered to them, reading your post makes me think they were harvesting affiliate payments.

    • If the goods were undeliverable then affiliate fraud would indeed seem to be the most likely reason behind it.

      Do you know for sure that the goods were undelivered though?

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