8 Types of Affiliate Marketing Fraud — and How to Avoid It

min read
8 Types of Affiliate Marketing Fraud — and How to Avoid It

Performance marketing brings brands, networks, and affiliates together to drive more traffic and conversions for brand campaigns. While many brands and performance agencies enjoy successful and mutually beneficial relationships, affiliate fraud has left the industry with a black eye.

Many say that the bad old days of shady affiliate marketing is waning, but it takes more than talk to instill confidence in your partners. In order to rebuild trust with brands and other partners, we must not only acknowledge the issues we face, but actively work to detect, fight, and prevent affiliate fraud.

Here we will go over what affiliate fraud is, what it isn’t, and how to spot the five most common types of affiliate fraud.

What Is Affiliate Marketing?

Affiliate marketing is a great strategy for bringing in new sources of revenue. Affiliates promote your product or service on your behalf and for any new business they bring your way, the affiliate earns a commission. The more they funnel your way, the bigger the commission, so they’re quite incentivized to generate new business on your behalf. It’s a great way to leverage “word-of-mouth” recommendations that drive traffic and sales to your organization. One of the most popular forms of affiliate marketing is pay-per-call.

What is Affiliate Fraud?

As you know, pay-per-call is an advertising model where an advertiser pays an affiliate commission for calls driven that meet specific conditions. These conditions can include caller region, time of call, and total talk time, as well as methods used like paid search and directory listings.

Affiliate fraud occurs when an affiliate or publisher purposely drives fake leads that violate any part of the contract in order to receive payment unjustly. This includes mimicking the advertiser’s required conditions in exchange for payment or violating the allowable methods to drive traffic.

Don’t Confuse Invalid Leads With Fraud

Not every lead that an affiliate generates is going to a good fit to become a customer. While getting 100 percent perfect leads would be awesome, you’ll always get some invalid leads with the good ones. The important thing here is to differentiate between fraudulent leads and invalid leads. Affiliates cannot be held accountable for a reasonable number of invalid leads, and since they’re not malicious, the affiliate is entitled for payment.

8 Common Types of Affiliate Fraud

Typical affiliate fraud methods come in eight different but equally unsavory flavors. Let’s take a look at each type.

1. Unauthorized Sources

Advertisers define the acceptable media channels through which an affiliate can drive traffic. These sources may include but are not limited to: Email, paid search (keyword bidding), display, social, print ads, radio, and warm transfers.

Any lead driven outside of the approved media channel is considered a fraudulent lead. While the lead may be technically legitimate, the buyer may not want leads from social, for example, and would be under no obligation to pay for them. As an example, some brands prohibit affiliates from brand name keyword bidding as it interferes with their own campaigns, so even if an affiliate drives a quality lead through that source, they should not be paid out and the call is considered fraudulent.

2. Stolen Credit Card

Stolen credit card numbers are a classic but persistent method of defrauding performance marketing customers. With a pile of stolen credit card numbers, a shady affiliate can impersonate consumers to buy the product or service from the advertiser in order to receive a commission from the sale driven.

When the real consumer disputes the charge, the credit card company reverts payment from the advertiser, but the bad affiliate keeps their payment. This type of fraud is most prevalent in cost-per-acquisition (CPA) campaigns that require payment from the consumer before the affiliate receives a commission. It can be difficult to spot right away as it takes most advertisers 30 days to receive a dispute. By then, the affiliate will probably be in the wind.

3. Account Selling

Agreements between advertisers and affiliates are between specific organizations. If an affiliate has a good reputation, quality relationships, and solid commissions, another affiliate may want to impersonate them by buying their online accounts. There are online marketplaces that facilitate the sale of pre-activated affiliate accounts to a specific advertiser or network.

Since advertisers set up agreements with specific affiliates, buying an account to impersonate the established affiliate is a breach of conditions.

4. Mystery Shopper

Also known as incentive traffic, bad affiliates will impersonate or hire others to impersonate interested buyers in order to meet the advertiser’s requirements and receive a commission. These callers sound interested, provide information, and stay on calls for believable durations.

Mystery shoppers are some of the worst offenders on performance campaigns and can be very difficult to catch.

Many of the “mystery shoppers” are hired through Craigslist ads, emails, and recruiting sites, and the people making the calls are completely unaware that they are part of a scam, so they take what they are doing seriously. Some are actually paid by the affiliate, but most figure out that they made a bad move when the check for their “mystery shopping” duties never arrives.

5. Click Fraud & Bot Traffic

Click fraud primarily occurs in pay-per-click advertising campaigns, where individuals or automated bots generate fraudulent clicks on ads to drive up costs for advertisers or exhaust their budget. It’s quite shocking to know that there are people out there who mindlessly click on ads for this purpose. I know I have better things to do! These fraudulent clicks do not lead to genuine user interest or engagement with the advertised content. 

Bot traffic refers to the use of automated software or scripts, commonly known as bots, to generate artificial traffic on websites or affiliate links. Bots can simulate human behavior, such as clicks, visits, or conversions, which will distort a business’s analytics and mislead advertisers and their associated affiliates. 

These fraudulent practices undermine the integrity of the affiliate marketing ecosystem, lead to financial losses for legitimate businesses, and erode trust among stakeholders. Preventive measures, such as robust fraud detection systems and proactive monitoring, are crucial to combat these fraudulent activities and maintain a healthy affiliate marketing environment.

6. URL Hijacking (Typosquatting)

URL hijacking is the nefarious act of taking advantage of a highly popular website name and redirecting users to their own, usually sketchy, corner of the internet. Think of it as online identity fraud. People design and create URLs that are closely spelled to the original in hopes that those who actually make the typo end up on their site and offer something completely different than what was intended. 

7. Cookie Stuffing

Cookie stuffing is an unethical practice used in online advertising and affiliate marketing, where an individual secretly places an excessive number of tracking cookies on a user's device without their knowledge. These cookies falsely attribute future purchases or actions to the person responsible for the cookie stuffing, enabling them to fraudulently earn commissions or benefits from affiliate marketing programs. It undermines the integrity of the system by distorting the true source of referrals or conversions, and it is widely regarded as a fraudulent activity.  

8. Google Ad Hijacking & Website Cloning

As Admiral Ackbar would say, "It’s a trap!" Users will click on a hijacked ad that lands them onto a cloned site when they’re expecting to navigate to the original. The intent is to deceive internet users to divulge personal information such as credit card numbers, dates of birth, usernames, and/or passwords. These clever impostors not only steal the identity and credibility of established brands but also manipulate Google's ad system for their own gain. By hijacking ads and luring users to their cloned domains, they engage in unethical practices, potentially exposing visitors to scams, phishing attempts, or other fraudulent activities.

It's a trap! | Star Wars Memes Wiki | Fandom

Preventing and Fighting Affiliate Fraud

Given the history of fraud in performance marketing and the suspicions that brands may have about the industry, it’s tempting to put your head in the sand and quietly fight the baddies. In order to rebuild the reputation of the industry and instill trust in your partners past, present, and future, it’s time to face the beast head on and show that you’re doing everything in your power to fight it.

How Invoca Helps Marketers Drive Higher-Quality Leads from Affiliate Channels

Invoca is an invaluable ally for assessing the quality of phone leads from affiliate partners, thanks to its comprehensive call tracking capabilities. By leveraging Invoca, businesses gain a remarkable level of visibility into the calls generated through affiliate partnerships. The MoneySolver case study exemplifies its effectiveness. With Invoca's platform, MoneySolver successfully tracked and analyzed the phone leads generated by their affiliate partners, enabling them to assess the quality and effectiveness of those partnerships. With call tracking, the MoneySolver marketing team was able to identify the most valuable affiliates, optimize their marketing strategies, and allocate resources more efficiently. Invoca's solution empowered MoneySolver to make data-driven decisions and maximize the ROI of their affiliate marketing efforts.

Additional Reading

Want to learn more about how Invoca can help you drive higher quality leads from your affiliate marketing programs? Check out these resources:

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