Affiliate marketing can be a great tool for businesses who want to get their name out there through someone who your potential customers already like. Affiliate marketing utilizes the name and image of a trusted public figure, whether it’s a celebrity, an influencer, a micro influencer, or a blogger, to sell your products more effectively. However, because your affiliates only get paid when they make a purchase, the possibility of affiliate marketing fraud is always out there.
Here’s what you need to know about detecting and avoiding affiliate marketing fraud.
Why Is It Important to Avoid Fraud in Affiliate Marketing?
The importance of avoiding fraud in affiliate marketing may seem obvious – after all, it’s a good idea to avoid fraud in general, because that can cost your company money. In a 2020 study, CHEQ, working with the University of Baltimore, found that affiliate marketing fraud may have cost the advertising industry a whopping $1.4 billion in just that year. Affiliate marketing fraud can cost your company a significant amount of money if left unchecked.
However, it’s also important to remember that the idea of how much fraud occurs in affiliate marketing can vary dramatically, based on both your definition of fraud and your industry. Some studies, like a study the University of Illinois did on Amazon affiliates, have estimated fraud levels at or higher than 38%, while many experts estimate a rate of around 9% for affiliate marketing in general. The important thing to remember is that any time you have an affiliate marketing program, you’ll almost certainly experience fraud, and it’s important to combat that fraud as much as possible.
1. Write a High-Quality Terms and Conditions Brief
Your terms and conditions need to be the baseline for interacting with your affiliates, and this is why a high-quality terms and conditions brief is important. In your terms and conditions, you need to outline what your company specifically considers fraud. If your affiliates don’t know that a certain behavior is considered fraud, they might feel blindsided when they’re penalized for doing that behavior. Be clear and direct regarding issues with fraud.
2. Stay Up to Date With All Referring URLs
Referring URLs are one of the most helpful tools you have in checking out potential fraud with your affiliate program. If you start noticing a number of referring URLs you’ve never seen before, or you notice referring URLs with names that may indicate low-quality content, it’s worth it to check out these URLs. A high number of these URLs or consistent referral links may indicate that an affiliate is paying for clicks or false conversions.
3. Examine Unexpected Surges in Traffic or Conversions
If you notice that a specific affiliate has suddenly received a huge surge in traffic or conversions, that’s usually a red flag. It’s totally possible that an affiliate has suddenly had a post or video go viral, and that’s why they’re suddenly raking in new traffic, but it’s important to match up metrics between an affiliate link and the website it’s posted on. If you notice that the traffic or conversions don’t match up with someone’s performance in other areas, this can indicate fraud.
4. Gather as Much Data as You Can
There’s nothing wrong with gathering more data over less. The more data you have, the more likely you will be to determine whether someone is experiencing surprising success or fraudulently making claims. The data you’re gathering may include general conversion rates for your industry, conversion information for your other affiliates, referring URLs, and more. This data can help you determine whether someone’s claims are genuine or whether they’re trying to defraud you.
5. Do Some Work by Hand
Automated work can help alleviate a lot of the problems that arise when trying to detect fraud. However, automated systems will also always miss some parts of the puzzle. You can’t rely exclusively on automated systems to tell you what’s happening with your affiliates. You need to do your own work as well. Plus, being willing to work on it yourself can help you build trust with your affiliates that you won’t remove them from the platform just because of an automated ping.
6. Act When You Notice Fraud
Finally, it’s important to take notice when fraud occurs. You can’t just allow someone to continue to defraud you, but it’s also important to allow for the fact that they may not have intentionally engaged in fraud or that you may have misinterpreted some data. When you notice an issue that you’ve identified as fraud, reach out directly to the affiliate in question and let them know. You may want to give them a chance to show that they aren’t engaging in fraud, as well. Your terms and conditions should lay out the path that you’ll take when you identify fraudulent practices.
The Bottom Line
Fraud is something that no one wants to deal with, but it is a problem that you might experience within your affiliate program. Use these steps to make sure you’re avoiding fraud at all costs within your affiliate marketing program.