Working to Minimize Fraud on Cashback Sites – By Christopher Park

by Sara Szado on May 11, 2016

If you’re a merchant who partners with cashback sites, you see fraud from time to time. An order comes in that is ten times your average order value. The order includes thirty of one of your highest priced items… all in the same size and color. It has different shipping and billing addresses, and they’ve requested next day air.

It’s obviously a fraudulent order. The shopper is hoping that even if you catch the order and don’t ship it, you’ll neglect to reconcile with your affiliate program, and they’ll still get their cashback.

For the programs I manage, orders are reconciled at the end of each month. The cashback site isn’t paid for the fraudulent orders and the fraudster isn’t rewarded with any cashback.

Everything is back to normal, right? Not quite.

Because these orders aren’t automatically removed until the end of the month, daily and weekly reports can be artificially inflated. In a smaller program, with an average order value of $75, a $2,000 order can really affect reporting.

While it’s a never-ending struggle, merchants need to work with their partner cashback sites to minimize fraudulent orders and to hopefully chase away the fraudsters. If a merchant denies commissions on a fraudulent order and cashback isn’t paid, the fraudster will simply move on to another merchant and try their luck with them.

But if information is shared between merchant and affiliate, the fraudster can be targeted, not just the fraudulent order.

Most cashback sites that I deal with are very understanding when it comes to reversed commissions on the fraudulent orders, but I try to take it a step further. I also try to share the order information from the offenders. This information is treated in different ways by the sites. Some try to match the information to their records to see if the shopper is doing the same thing with other merchants.

The best cashback sites immediately ban the fraudster from their website. Cashback sites requiring additional information from shoppers at registration, such as addresses, phone numbers, verified email addresses, etc., also makes it harder on the fraudsters. When banned from a site, most fraudsters don’t want to put forth the effort of creating a new account with new addresses and emails when it’s easier to just move on.

And by getting a fraudster off a cashback site, I’ve not only helped my affiliate program, but every merchant’s program partnered with the cashback site.

Banning the fraudster may just move them to another cashback site to set up shop, but at least they know they won’t be rewarded by targeting my affiliate program. If enough merchants and affiliates work together and share information, we can start to minimize this type of activity in the future.

Christopher Park manages affiliate programs for Blair, Old Pueblo Traders and Bedford Fair.

This article appeared in issue 34 of FeedFront Magazine, which was published in April 2016.

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