Best Tactics to Detect and Avoid Affiliate Marketing Fraud

Businesses looking to expand their brand through a person who many of their potential clients already find appealing can find significant success with affiliate marketing. Whether it's a celebrity, influencer, micro-influencer, or blogger, affiliate marketing makes use of their brand and likeness to sell your goods more successfully. However, there is always a chance of affiliate marketing fraud because your affiliates only get compensated when they complete a transaction.

Here’s what you need to know about detecting and avoiding affiliate marketing fraud.

Why Is It Important to Avoid Fraud in Affiliate Marketing?

It may seem apparent how important it is to avoid fraud in affiliate marketing; after all, staying away from fraud in general is a smart idea, as it can result in financial losses for your business. According to a 2020 study conducted by CHEQ and the University of Baltimore, affiliate marketing fraud may have cost the advertising sector an astounding $1.4 billion in that one year alone. If you don't catch affiliate marketing fraud, it can cost your business a lot of money.

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

Lastly, it's critical to recognize fraud when it happens. While you can't just let someone keep stealing from you, it's also necessary to consider the possibility that they might not have done it on purpose or that you might have misread certain information. Inform the concerned affiliate directly when you become aware of a situation that you have determined to be fraudulent. Additionally, you might want to provide them an opportunity to demonstrate that they are not committing fraud. The procedure you'll follow in the event that you discover fraudulent activity should be outlined in your terms and conditions.

Although it's something that nobody wants to deal with, fraud is a possibility in your affiliate program. Follow these guidelines to ensure that, in your affiliate marketing business, fraud is avoided at all costs.