Affiliate Fraud – A Growing Concern in Affiliate Marketing? – By Tyler Allen

by FeedFront Staff on March 20, 2009

With an ever growing number of publishers and bustling campaigns, affiliate managers are certainly busy people. Amongst the affiliate manager’s long list of concerns is affiliate fraud. Both click and CPA fraud are continual concerns in the affiliate marketing industry.

Recent estimates indicate average fraud in the CPA segment to be as high as 8%, with some offers/industries experiencing fraud ranging upward toward 22%.

In this competitive marketplace, there’s little room for fraud, which hurts honest publishers, merchants, and networks.

Evolution of Fraud
Fraud is on the rise today, due to the sophistication of cutting-edge tactics used by fraudulent publishers. Many affiliate managers used to be able to spot almost all fraud with the naked eye by monitoring a publisher’s conversion rates, referring URL’s, and IP addresses.

The most sophisticated fraudsters today are using automated systems to complete multiple offers with real information that is stolen/borrowed to create a “profile”. This profile consists of a working virtual phone number with a matching voicemail, a valid email, and a new IP address for each offer.

Sometimes, these fraudulent publishers will even have someone answer the phone and tell the merchant they are no longer interested in the offer because they have already purchased the product/service elsewhere. This tactic is all in an effort to make the conversion look legitimate to the merchant.

The main problem is that increasingly complex schemes used by publishers today are becoming much more difficult to identify without access to data that is typically unavailable to the affiliate manager.

What Else Does Fraud Affect Besides ROI?
Unfortunately, fraud affects many other aspects of the advertisers business. Fraud against advertisers that require the use of a credit card to complete an offer can result in the cancellation of their merchant account due to a high amount of chargeback’s or use of stolen credit cards.

For advertisers tying to generate quality sales leads, it can really affect the morale and productivity of the sales force, resulting in many wasted phone calls and emails to potential clients who don’t exist, or who did not and will never have an interest in using their product/service.

Is Affiliate Fraud Illegal?
In short – yes. Affiliate fraud is stealing. It is not just a way to outsmart the system or to get back at the networks, as some publishers choose to believe.

The Federal Bureau of Investigation (FBI) Cyber Crimes division is spending more and more time investigating affiliate fraud due to its volume and potential to provide hard to track funds for devious uses.

The industry will likely see more attention from the FBI in the future if the growth of fraud in this area goes unchecked.

Tyler Allen is Executive Director of the Cyber Crimes Field Agency (CCFA).

Download the entire FeedFront issue 4 here –
FeedFront issue 4 articles can be found here as well:

Leave a Comment