What Is Affiliate Fraud?

Affiliate fraud refers to any false or unscrupulous activity conducted to generate commissions from an affiliate marketing program. Affiliate fraud also encompasses any activities that are explicitly forbidden under the terms and conditions of an affiliate marketing program.

In affiliate marketing, publishers and website owners can insert tracked links in their content that lead to a company’s online store, product pages, and registration pages. When a specified action takes place, such as a registration or sale of a product, the affiliate is paid a commission.

The temptation to profit from activity leads fraudsters to design ways to game the system with fake activity to generate new commission payments or increase the amount of the payments.

Understanding Affiliate Fraud

Affiliate fraud has always been an unfortunate component of affiliate marketing, but it has become more sophisticated since the emergence of digital marketing. Fraudulent activity associated with early affiliate programs that paid for traffic or clicks included auto-refreshing a page, using software to click, or spamming email from a referral link.

Pop-ups, particularly those opening behind the browsers, also became popular unscrupulous affiliate activities. This forced companies running affiliate marketing programs to extend their terms and conditions to eliminate these potentially brand-damaging techniques. 

Types of Affiliate Fraud

Technology has evolved to track and expose most of these techniques, but the market is now devaluing traffic in favor of sales or quantifiable actions. By doing so, affiliates only get paid when an item is added to a shopping cart or a registration form is completed. Fraud remains a problem, however, and newer types of affiliate fraud include:

• Using stolen data for lead generation or stolen credit cards to generate sales.
• Typosquatting, or URL hijacking domains that are near those of the company’s name or products to pick up a referral from the redirect.
• Getting people to download adware or spyware that inserts affiliate code automatically.
• Cloning other affiliate site’s content to steal away traffic.
• Buying Google AdWords on the search terms where a company or its products are already ranked.
• Cookie stuffing all visitors to a website to profit if a visitor buys something later for unrelated reasons.

Spoofing traffic and auto-filling forms with software are still effective fraudulent activities depending on the compensation setup for a particular affiliate marketing program. Establishing clear terms and conditions prohibiting most of the common fraud methods can prevent affiliate fraud if transactions are monitored for suspicious patterns and the terms and conditions are enforced.

Article Source: investopedia.com