Partner Marketing - Detecting Fraudulent Affiliates

Detecting Fraudulent Affiliates

by Bret S. D. Grow

Fraudulent affiliates are a growing problem in online advertising and affiliate marketing. I have only seen the problem increase over time. Because of this, I thought that I would share a few ways that you can effectively “weed out” potential affiliates who would harm your company’s reputation and possibly even lead you to financial pit falls.

The first level of defense is the affiliate signup form. There are some things that can be done to decrease the amount of bogus applications submitted to your company. Requiring a capchta image on the signup page should at least reduce the volume right out the gate. You have seen them before. They are those funny looking images that display letters, numbers and/or words that you are required to type in to a text box before you can submit your information. Not all captchas stop fraud, some can be read by Optical Character Recognition (OCR) programs which can submit fake applications without a person having to actually read the screen.

Once you have received an affiliate’s application, there are several tell-tale signs to look for before you start approving them.

If your affiliate management platform provides IP lookups by country, check the country the application was submitted from against the country the affiliate specified that they are in.
Look at the company description to see if it makes sense and is applicable to the company that signed up. Often times, a bad affiliate will just copy and paste some text.
Check the password submitted to determine if it appears to be created using random numbers and letters. If it looks like a computer generated it, then a computer probably did.
Look at the email address provided. Generally, it should not be a webmaster, admin, info or support address. If your affiliate management platform sends out a verification email, make sure they click on the link in that email to verify that they actually have access to that email address.
Check how the affiliate was referred to your site. Create a few “Sand Traps” by adding incorrect options to your application. For example, if you only get affiliates from website referrals and word of mouth, put a few extra options like billboard and radio on your signup application. If they choose one of these, the application may very have been created through an automated process.
Cookie Cutter Websites. Look at the website provided by the affiliate and click through a few pages. If it appears very generic or has a lot of broken links, beware. Is their a contact page or information? If so, make sure it matches what they submitted in their application.
The last method is usually the best. Call the phone number provided by the affiliate. I know this takes time, but I would never accept an application without this final step. Remember, you have already “weeded out” most of the applications using the previous methods so you don’t have to call all of them. If the number is disconnected, just decline the application and don’t waste anymore time. If someone answers and can not communicate properly or they don’t know anything about affiliate marketing, again, trash it. If the person on the line requests to know what the name on the application is and then rustles papers and delays getting answered to you, save yourself some time and just hang up.

Once your affiliate starts to run traffic, there are other signs that should get your attention and speedy action.

Look at their traffic to determine if they have unusually high click through or conversion rates. Some platforms like LinkTrust (www.linktrust.com) highlight these anomalies so you can immediately see affiliate traffic that exceeds the industry norm.
Many bad affiliates will “Fake” a conversion by attempting to fire your tracking URL and pixel from their desktop PC. This may create a conversion but it becomes clear what is going on if you look at things like their IP address and the Referral information. If no referral information is available in your platform reporting, it could be that none was available because the links were not executed form a real website.
Most bogus affiliates “Trickle” traffic and conversions so that they can remain under the networks radar for as long as possible. They focus on just getting as many affiliate accounts as possible to generate only a few transactions each month. Added all together, these transactions can add up really quick. So scrutinize your lowest performers.
If an affiliate emails you with a request to update their payment information, that can be a red flag. Most tracking platforms do not allow affiliates to update this information so that they can’t simply use one set of information to signup and then immediately change their payment info after they are accepted to have money sent over sees.
No W8 or W9 on file? Those who never turn in a tax form to you should not be paid. When they do send you one, again, scrutinize it for what may look like false data. A fraudulent affiliate generally will not contact you for payment if you fail to send it because of account suspension. That means that if you suspend an affiliate, wait for them to contact you to clear up any concerns prior to paying any commissions.

What is being done about Affiliate Fraud? Many have tried but all have failed to curb the fraudulent activities of affiliates. Many professionals in the industry that I have spoken to feel that it will never go away but will only intensify. I however take the other opinion. We are currently working on a solution that will curb much of the fraudulent affiliate problem. Certified Affiliates is a merchant and network community based service that compiles all known bad affiliates and fraudulent applications into a central repository for searching and track recording. Sorry, I won’t give away any of its big secrets yet. My point is that there is hope to eliminate a lot of the headaches and workload of dealing with unethical affiliate companies and individuals. Don’t look for this service to become available too soon as it is still in development and should release in 2009.

Affiliate fraud can and should be managed. If you neglect to fight it now, the problem will increase, often with severe consequences.

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Bret S. D. Grow
Executive V. P./ Cofounder
Burstabit Media
http://www.burstabit.com
e: bret@burstabit.com
growweb

Share your Comments

Good stuff - although problematic if you're on Commission Junction as most of those tools are not provided to Affiliate Managers.

Posted by: Trisha Lyn Date: July 07, 2008
URL: http://www.trishalyn.com
214818

On Commission Junction you have to go through the same processes to maintain a good affiliate base and get feedback from the merchant as to the fraud or bad orders as soon as they come in. CJ gives you until the 10th of the month to correct any fraud orders from the previous month.

Posted by: Evan Date: July 09, 2008
URL: http://www.experienceadvertising.com
215183

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Posted by: Jennifer Date: July 11, 2008
URL:
215502

Not ure why it says this:
"Look at the email address provided. Generally, it should not be a webmaster, admin, info or support address."

Posted by: Jeremy Date: August 15, 2008
URL: http://bashsoftware.net
217787