7 Ways to Detect & Prevent Affiliate Fraud – By Geno Prussakov

by Colleen on September 7, 2011

Online fraud is a reality. The only way to fully avoid it is to not be doing any business online. To be effective in dealing with affiliate fraud, you must learn how to effectively detect and prevent it at the early stages. Thankfully, there are plenty of tools and methods that can help affiliate program managers with this task.

However, before we dive into the tools and techniques to employ, let’s define terms. “Fraud” is generally defined as “criminal deception intended to result in financial or personal gain”. Obviously, most of the things we’ll be looking out for while monitoring unwanted affiliate activity won’t be “criminal”.

In fact, some argue that a better word for such activity is “abuse”, or unethical behavior. Whatever you call it, we all know we’re talking about the same thing – unethical affiliate activity intended to result in financial gain.

Now, to be “unethical”, it has to violate something, or go against some rules. So, to begin with, you want make sure you have an affiliate program agreement in place. Not to be confused with the affiliate network agreement, it is basically the contract between you and your affiliates.

You can review a sample affiliate program agreement at amnavigator.com/TOS.html.

Just having that affiliate program agreement in place doesn’t safeguard you. It gives you grounds to enforce the rules. I’d like to offer you seven ways that can help you detect and prevent affiliate fraud. These are:

1. Whatever anyone may tell you, don’t buy into auto-approval of affiliate applications. Review every application manually.

2. Always conduct research on a new affiliate (or a marketing method they use) before approving them into the program. (Do they have an active website? What marketing methods are they employing? Are these methods a good match to what you are doing?)

3. Watch out for sudden traffic surges, as well as quick increases in affiliate-referred transactions (sales, leads, or whatever else you may be paying them for)

4. Keep an eye on fraudulent transactions (stolen credit card numbers, fake leads, cancellations of self-referred transactions when commission has already locked, etc) — two such transactions from the same affiliate should raise a red flag, any three should result in a ban from the program.

5. Employ tools. To catch any cyber- or typo-squatters check out CitizenHawk. And for violations of your paid search policies, consider using PoachMark, TheSearchMonitor, or AdGooroo.

6. Monitor your brand reputation online to see what customers are saying about it and to catch any spamming affiliates.

7. Educate yourself on parasitic and cookie-stuffing affiliates (to keep them out of your program). When in doubt, ask in affiliate forums or consult with AffiliateFairPlay.com.

There will never be a way to make policing and enforcement look sexy. However, it is an integral component of affiliate program management. If you’re not doing it, you’re losing money.

Geno Prussakov is the Founder of AM Navigator.

Download the entire FeedFront issue 15 here – http://www.scribd.com/doc/61379014/FeedFront-Magazine-Issue-15

FeedFront issue 15 articles can be found here as well: http://feedfront.com/archives/article00date/2011/09

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