How Advertisers Can Effectively Deal with Affiliate Fraud Issues

Hey all! I wanted to discuss a topic that is often swept under the rug in Affiliate Marketing, but rears its ugly head periodically depending on each affiliate program…affiliate fraud. Affiliate fraud is something that has to be taken very seriously with processes and procedures in place to prevent it and detect it before it becomes an issue. From the early days of affiliate marketing, unscrupulous individuals have sought to produce either bogus sales or leads and get paid commissions on them. There are many ways bogus sales and leads can be generated and it’s a problem that has to be taken seriously so your merchant account is not negatively affected, not to mention your customers’ identity compromised. Here are some ways to make sure affiliate fraud doesn’t become an issue for your company:

– Good Procedures in Place – make sure you have a good procedures in place to validate all the sales or leads that are coming in through your affiliate channels. One of the best ways to catch fraud is to actually call all of the sales or leads that come in through your affiliate channel. Having your customer service agents place friendly “Welcome Calls” to your new customers or leads will detect any kind of fraud that may have occurred, not to mention reinforce the sale and build rapport. The customer will say, “I didn’t order that” or something to that effect, at which point you know the sale or lead was bogus and can take appropriate steps to terminate the affiliate and reverse the commission amount. The customer may have to cancel their credit card if a stolen credit number was used and look into any other abuse that may have occurred with their credit card. Of course, this has to be looked into very thoroughly to make sure that was the case or it wasn’t a “sub-affiliate” of one of your affiliate networks for instance. Another good procedure is to scan all the affiliate payouts at the end of the month for new producers and international producers that may have jump in and made sales or leads. Another indicator can be a higher than usual “conversion rate” on the traffic affiliates are sending. Make sure to look for these types of red flags on a weekly or monthly basis in order to not payout commission on fraudulent sales or leads.

– Affiliate Approval Process – every company or agency handles the new affiliate approval process in their own way, but to make sure no bad apples get into the program you have to have a great affiliate approve process in place. The best way to make sure every affiliate is legit is to call all of the new affiliate applications and ask them about themselves and how they do their affiliate marketing. Most of the time this will weed out any bad apples before they are even approved. Otherwise, you can look at their application data points like: name, website, promotional methods, and country of origin to determine if you will approve their affiliate application. Also, make sure to clarify what their method of promotion is to make sure it’s an approved method. Some companies don’t allow incentivization, keyword bidding, or email marketing for instance, so the promotional methods have to be discussed. These procedures should weed out any bad apples that might be looking to get over on your company’s affiliate program.

– FraudLogix – if you are doing a high volume of sales or leads from many affiliate networks, you may want to look into FraudLogix. They specialize in detecting affiliate fraud for high volume Advertisers and lead generators. I have heard great things about this company, so check them out if you are a high-volume Advertiser or lead generator.

With these good procedures in place, you should be able to keep any type of affiliate fraud at a bare minimum. Many companies are so concerned about growing their sales that they overlook this issue, but it definitely needs to be accounted for with proactive procedures in place. I hope this explained the issue well and provided some solutions. Please let me know if you have any questions or would like to add any comments. Thanks and have a great day!

CEO and Founder

Evan is the CEO and Founder of Experience Advertising. He has more than 20 years experience and background with ecommerce website marketing. His skill sets include: search engine marketing, social media marketing, affiliate marketing, conversion rate optimization, and other traffic driving and community building strategies.

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