Affiliate Marketing Fraud: A Growing Concern for Online Advertisers

"Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate’s own marketing efforts.”

The rise of the internet has totally transformed the way businesses use to market their products. It has created new opportunities, allowing businesses to use online marketing as a tool. Targeting niche markets and audiences is now effectively possible, which would have been inaccessible otherwise. Affiliate marketing is one such process that has significantly aided online businesses.

Affiliate marketing, as defined above, is a business model that has encouraged third-party publishers and affiliates to assist in promoting and driving the sales of a business. Affiliates create traffic or leads in return for a commission or fee. It was a well throughout strategy that brought in customers while the business only paid commission on conversions or genuine leads. Either the affiliate marketer succeeds and takes their cut, leaving you with a healthy profit from increased sales, or they fail, leaving you with nothing.

Unfortunately, wherever there is money, there is a possibility of digital fraud. This strategy has recently encountered a growing concern, Affiliate Marketing Fraud. This can be detrimental to your company in a variety of ways.

The Dark Side of Affiliate Marketing

Since affiliate marketing is a performance-based initiative, it makes it easier for fraudsters to profit from it. But of course, through fraudulent means. Scammers defraud the process by taking commissions on sales made with stolen credit cards or generating bad leads through digital ad fraud. There are instances of using device farming and click fraud for Affiliate Marketing fraud. Fraudsters take advantage of vulnerabilities in tracking attribution to claim commissions through unfair means. Ultimately the advertising budget is depleted, and the Return on Investment suffers.

Affiliate Marketing Fraud

It is a type of ad fraud in which affiliates defraud publishers and advertisers in order to collect commissions. Affiliates are making money out of these schemes through dishonest means. It is possible to carry it out by driving unwanted visitors to your website or by utilising bots to activate affiliate benefits. This includes everything from click flooding on CPC (cost-per-click) links to the use of sophisticated software that imitates actual users.

More importantly, such activities have a significant impact on legitimate affiliates. Affiliate marketing is a well-practiced technique, and any such actions will adversely impact the method’s overall prominence. Advertisers will be paying thousands of dollars in attribution fees to fake affiliates. Moreover, it will destroy the possibility of legitimate and successful affiliate relationships.

There are multiple ways through which fraudsters can deceive the operations of Affiliate Marketing. Let's have a look at it one by one

Cookie stuffing

It is the practice of dropping a third-party cookie from a website to the user. A fraudster places a modified cookie on the computer of an unsuspecting visitor. When this visitor purchases the product or service, the commission is paid to the fraudulent affiliate, regardless of how they arrived. This technique is considered fraudulent because it occurs without the user's consent. It will appear that the transaction is completed following the affiliate's unique link. Resultantly, the affiliate takes their commissions while providing no benefit to the business. The additional cost of this business is deceived into believing that a large number of purchases are generated from this affiliate, while in reality, those are actually sales from other channels. Furthermore, this would even result in an honest affiliate having their commission stolen.

Click Fraud

The cost-per-click (CPC) model pays affiliates a commission based on the number of clicks brought on the ads. And it is very easy for fraudsters to take advantage of this model by employing a number of fake clicks. Click-fraud can generate a large number of fake clicks through click farms or by using sophisticated bots. Moreover, following a type of mobile ad fraud, fraudsters may also infect user devices with malware and thus recruit users into a botnet, getting the desired traffic and visits to the digital ad.

App Install Fraud

App Install fraud, which is a type of mobile ad fraud, is also a common practice in attacking Affiliate Marketing. This follows a Cost-per-install (CPI) model which includes paying affiliates a commission for each successful app install. This advertising model is popular in mobile, particularly among gaming companies seeking to increase app users.

Site cloning

Website cloning is the method of duplicating a new website from an existing website. Fraudsters use this process to benefit themselves by creating copies of legitimate affiliates' sites in order to mislead publishers and advertisers. As a result, they direct the genuine traffic to the wrong site, where conversions eventually occur. This redirects purchases to a fraudulent website and then steals the commission earned by honest affiliates. Clone websites incorrectly attribute affiliate activity to a fraudster.

Ending Note

Yes, Affiliate Marketing Fraud exists. In fact, a report claims that 17% of the traffic coming from Affiliate programs is fake. This might not appear that significant, but in reality, it is expected to cost the advertising industry $3.4 Billion in 2022. Affiliate Marketing is an effective customer acquisition channel that can also promote a brand. Unfortunately, it is now associated with fake traffic. One can successfully build a brand through this channel if following the correct measures. When using the internet, you need to be vigilant, and thus, it is important to pick out the right affiliate channels.