Affiliate marketing is a $16 billion industry that continues to grow with eCommerce. With that growth comes fraudulent methods to steal from businesses. Whether you offer affiliate marketing or are an affiliate, it’s understandably frustrating when criminals undermine your hard work.
There are multiple ways affiliate fraud can happen. This versatility makes it more challenging to recognize and prevent them from happening. However, the prevalence of this fraud has allowed eCommerce partners to learn how to spot them over time.
What is Affiliate Marketing?
Businesses use affiliate marketing as another way to market their products and services. They partner with other companies, bloggers, or influencers who will promote them through content.
For example, a travel blog with a decent amount of subscribers might become an Amazon associate to create extra income. Amazon associates are affiliates that link Amazon products on their platform. When a reader clicks on the product link, it will take them to the Amazon product.
Clicking on the link itself does not earn the affiliate commission. Only if a reader buys the product through the link does the affiliate earn a share from Amazon.
Some brands offer commissions to affiliates based on traffic.
Why is Affiliate Marketing So Big?
When it comes to online advertisement, we think of ads splattering across web pages and Google. These online ads work if they happen to catch the viewer’s eye. Personalized ads make selling to a viewer more effective.
Affiliate marketing, on the other hand, employs word-of-mouth tactics to pull in consumers. Most of the time, affiliates are also consumers of the brand or product they’re promoting.
Hearing an affiliate swear by the quality of a product is much more personable than a standard ad. Additionally, viewers come across these affiliates by searching for their interests. They may happen across an affiliate link on a blog when they look up “the best travel backpacks 2021.” The blog writer and affiliate may be considered a reputable source in evaluating travel gear. Therefore, buyers feel confident about the quality of the recommended travel backpack.
Nearly half of American merchants report that affiliate marketing is their top customer acquisition method.
The Effectiveness of Affiliate Fraud
The enormous attraction to affiliate marketing makes it a vulnerable target. Fraudsters can easily dupe consumers, merchants, and affiliates.
Learn about the different methods of affiliate fraud to further safeguard yourself and your business from them.
Fraudsters can target these cookie tracking systems. These “affiliates” hack the website’s cookies to gain commission they hadn’t earned. The cookies fraudulent affiliates plant link purchases to them, even though users did not use their affiliate link to access the website.
Another way cookie stuffing happens is when a consumer looks up a merchant with typos. Fraudsters buy domains similar to a merchant’s but with one or a couple of different letters.
When users accidentally type a merchant’s domain wrong, they still end up on the true merchant’s site. However, by looking up the false domain, a cookie is placed that gives the fake domain owner a commission on purchases. This same process can be done through IP addresses as well.
Fraudsters use pop-ups, ads, and spyware on consumers’ computers. These third-party programs direct a user to a brand’s website. Then, it tricks the website’s affiliate system into thinking that the fraudster generated more traffic than just one user.
App Attribution Fraud
Existing users can receive benefits from others downloading the app per their recommendation for apps such as Uber. Attribution fraud happens when a fraudster claims credit for app downloads that were organic or recommended by an innocent affiliate.
Like cookie stuffing, criminal affiliates use their unique affiliate code to earn from an app install. They hack an installation by tricking the app program into using their code for contribution.
How to Prevent Affiliate Fraud
Affiliate fraud is not as simple as your typical fraud case. However, its rise has given merchants a better chance to fight against it.
Partner with Affiliates You’re Comfortable With
Affiliate fraudsters target affiliate programs that are easy to be a part of. It can be easy to use a system that vets affiliates for you. However, if you want to stay safe, your company should undergo a thorough interview process for each affiliate. Fraudsters are not likely to go through multiple steps to become an affiliate.
Communicate with Affiliates
Affiliate partners can bring in a priceless amount of traffic to your store. A tight communication line between you and affiliates will strengthen your affiliate system. An affiliate who ghosts you but actively sends referrals can be a red flag.
Check Your Data
Hire somebody or take the time to go through your affiliate data regularly. You may be able to spot suspicious instances before they spurn into more significant problems. For example, a user that buys a product within two seconds of visiting your website is fishy. This could be the work of a fraudster using click-hacking to gain affiliate credit for themselves.
Additionally, look out for misspelled versions of your domain and IP addresses.
Upgrade your Fraud Protection
Our services offer top-of-the-line fraud prevention to reduce your chargebacks and save you from headaches.
3D secure is a critical tool in preventing unauthorized purchases. It processes communication between systems of the issuing bank, acquiring bank, and card provider. 3D secure requires additional information from the customer to authenticate transactions. This will help prevent “not authorized” purchases.
Revitpay’s system sends merchants chargeback alerts when a client files a dispute. This early warning gives businesses extra time to resolve the dispute before it becomes a chargeback. Fraudulent transactions can slip through the cracks when companies are unaware of incoming disputes.