DEFINITION of 'Affiliate Fraud'

Affiliate fraud refers to any false or unscrupulous activity meant to generate commissions from an affiliate marketing program. Affiliate fraud also encompasses any additional activities that are explicitly forbidden under the terms and conditions of an affiliate marketing program. In affiliate marketing, publishers and website owners can insert tracked links in their content which lead to a company’s online store, product pages, registration pages, and so on. When a specified action takes place, such as a registration or sale of a product, the affiliate is paid a commission. Of course, the lure of money causes some affiliates to find ways to game the system with fake activity in order to generate or increase the payments.

BREAKING DOWN 'Affiliate Fraud'

Affiliate fraud has been around as long as affiliate marketing, but it has become more sophisticated in the digital marketing world. With early affiliate programs that paid for traffic or clicks, the fraudulent methods could be as easy as auto refreshing a page, using software to click away, or spamming emails out with the referral link. Pop ups, especially those opening behind the browsers, became very popular unscrupulous affiliates as well. This forced companies running affiliate marketing programs to put more work into their terms and conditions to cut out these potentially brand-damaging techniques.  

Types of Affiliate Fraud

Technology has evolved to track and expose most of these techniques, but the market itself has started devaluing traffic in favor of sales or quantifiable actions. Affiliates would only get paid when an item was added to a shopping cart or a registration form was filled in. But fraudsters find a way. Newer types of affiliate fraud include:

  • Using stolen data for lead registrations or stolen credit cards to generate sales.

  • Typosquatting on domains that are near those of the company’s name or products to pick up a referral from the redirect.

  • Getting people to download adware or spyware that inserts affiliate code automatically.

  • Cloning other affiliate site’s content and trying to steal away traffic.

  • Buying up adwords on the search terms a company or its products already rank on.

  • Cookie stuffing all visitors to a website to profit if they happen to buy something later for unrelated reasons.

Spoofing traffic and auto-filling forms with software still work as well depending on how the compensation for a particular affiliate marketing program is set up. The key to preventing affiliate fraud is to have clear terms and conditions prohibiting most of the common fraud methods. Then it is a matter of monitoring the transactions and enforcing the terms and conditions when suspicious patterns emerge.

 
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