Over the past decade, affiliate marketing has developed into one of the most valuable marketing expansion methods in acquiring new customers. While this has made several SaaS firms propel its growth, it opened doors for many fraudsters and cyberattackers.
As the world continues its journey of digitalization, affiliate marketing has proven to be an extremely effective method in discovering specific niches that might have been previously unreachable pre-internet times.
For bloggers, it can be a literal goldmine and a great way to monetize their sites. As Covid19 shifted, digital world experienced unprecedented growth, through new blogs, online businesses or social media influencers entering the scene or growing their presence.
Affiliate marketing by itself is an incredibly great technique to get great products and services a boost. Unfortunately reports claim that advertisers will suffer a total loss of $100 billion by 2023 to affiliate fraud. And it continues to rise.
Now comes the question: how can businesses detect and prevent it?
When joining an affiliate platform or creating an independent affiliate program from scratch, companies have the ability to add tracked links to their content. This leads to a website’s page with the affiliate taking a percentage based or in some cases an Earnings per click (EPC.)
However, affiliate fraud is committed when a person unethically utilizes a campaign and goes directly against the terms and conditions of an affiliate program. This is normally done for the sake of earning more payouts, which is technically a form of online fraud. The biggest victims of affiliate fraud are small eCommerce sites and other online retailers who do not have the right RiskOps to counter these actions.
Let’s delve deeper into four different forms of affiliate frauds that can happen to any company unaware of these methods. Normally a fraudster tries to manipulate a program by using a fake identity or domain and using different methods to trick end users into purchasing from them. Here are four methods fraudsters use.
One of the most common ways of affiliate fraud is using a unique affiliate link and sending out tens or even hundreds of emails at once to contacts acquired from the dark web. Fraudsters usually send out thousands of emails a day, looking for a list of people prone to fall for their tricks, pretending to be managers, founders or consultants.
More daring scammers and fraudsters are willing to take things a notch further. Having built a website, they try taking traffic from a legitimate website and mislead a page visitor with commercial interest to his or her landing page.
This way the scammer can capitalize on an unaware customer, meanwhile the official site with the affiliate program loses on the commission.
Affiliate programs that use EPCs (earnings per click) like Grammarly, pay their affiliates not only based on commissions after a purchase but through traffic brought in by clicks. This gave an opportunity for fraudsters to utilize software to emulate human actions. This helps them generate fake clicks, which can multiply a fraudsters’ revenue from an unaware affiliate program.
This is perhaps every online retailer’s nightmare when fraudsters hijack a site’s domains close to the company’s name or their product. Usually what fraudsters do is take a letter out or add an extra “s” or “er” to a domain name they can purchase on NameCheap or a hosting provider like Bluehost.
An unaware browser with an intent to purchase will see an ad displayed through social media and make a purchase.
Despite the aforementioned risks, there are several prevention and detection methods that online retailers can implement without paying hefty fees for a risk operations team or software. There are three simple methods to do this.
When an affiliate wishes to sign up to a program they must create an affiliate account with their information. This is where the right KYC measures must be implemented to ensure that their information is true. Usually most affiliate platforms ask for an email, name, address, occupation and several basic information.
Anyone can make up this information and get away with it. But application portals that require face scans, ID verifications or more personal information can ensure more safety from affiliates pretending to be someone else.
In order to avoid suspicious activities an email lookup tool can be beneficial to monitor whether an applicant’s information adds up. For example, monitoring the quality of customers and the traffic that they intend to bring through their domains is one great way to understand affiliate fraud safety.
An email lookup solution enables affiliate teams to regulate and track data, as well as analyze variables like name, email, IP address and in some occasions, social media accounts.
Device fingerprinting is able to scan an affiliate end user through software and hardware configuration and record them as ID numbers/hashes. If you want to block illegitimate traffic to your site completely, device fingerprinting is perhaps the most effective way to do so.
Affiliate marketing is a great way to expand one’s brand in the right direction. But lacking the right risk operations can incur heavy damages to a business because of fraudsters and scammers. Having the right prevention methods in place can help reduce fraud and make companies continue operating without the trouble of worrying.