What Is Affiliate Fraud and How to Prevent It?

Affiliate fraud methods 

Affiliate marketing processes are mostly automated, which results in a lack of direct human supervision. This gives fraudsters numerous opportunities to play with the operations and twist them to their advantage. There’s a variety of affiliate fraud methods they can use.

Cookie stuffing

Browser cookies are put on all visitors’ computers to enable a more personalized user experience as well as tracking. Affiliate cookie stuffing is a process when a website drops third-party malicious cookies onto a visitor’s browser. 

These cookies cause traders with affiliate programs to wrongly attribute website traffic to the scammer. In turn, affiliates who actually brought the traffic to the company’s website lose their money. As fraudsters continue stealing their commissions, the affiliates see no further point in participating in the affiliate program.

In many cases, the owner of a website may be unaware of cookie stuffing taking place. For instance, their website uses an extension, such as a chatbot, that is designed to sneakily place third-party cookies in the visitor’s browser. 

Fraudsters would get credit from malicious cookies if a customer happens to visit the company’s site and make a purchase that would cause further compensation -  no matter if that site was ever promoted via an affiliate program. 

As a result, a colossal marketing budget may be wasted on compensations for unscrupulous affiliates who, in fact, never put any marketing efforts into driving traffic to businesses. 

Most of the time, website visitors don’t even need to click on the ad promoting the business within the affiliate program. Cookies get incorporated into their browsers without their knowledge and permission. Thus, not only affiliate marketing compliance guidelines are violated, but also the European Union’s (EU’s) General Data Protection Regulation (GDPR).

Typosquatting 

This affiliate fraud tactic involves registering domain names similar to the merchants’ domain names but misspelled in the most anticipated way. When users mistype the URL, they land at the fraudulent domain and then are redirected to the authentic website, thus increasing the number of referrals from redirects for the affiliates.

Typosquatting, also known as URL hijacking, includes five main subtypes:

• A frequent misspelling, or foreign language spelling, of the targeted site. 

• A misspelling based on the mistake in a typed or printed text published somewhere else. 

• Plural or singular forms of the domain name.

• A different top-level domain name (for example, .org instead of .com).

• Misuse of the Country Code Top-Level Domain (.cm, .co instead of .com).

Software development kit (SDK) spoofing

This affiliate marketing fraud type can be especially profitable if there’s a cost-per-install pricing model associated with the installation of an application. In this case, affiliates are paid for sign-ups and installs. 

Software development kit (SDK) spoofing is a way of fake traffic generation when malicious actors determine how different app SDKs distribute install and attribution data. For example, fraudsters may use malicious programs that watch over the user’s activity and get informed every time a new app install starts. Later, they use this user data to indicate that a real user’s device had installed an app when, in fact, it never happened. 

Without adequate oversight, SDK fraudsters can acquire multiple device IDs to keep generating fake installs and earning the commission. The issue with SDK spoofing is that it’s very hard to track and detect affiliate fraud since all installs look totally natural.

Malicious adware

Website visitors unintentionally download malicious spyware that may appear in the form of pop-ups and other kinds of ad fraud. This adware sneaks the code into the user’s browser, which artificially blows up the traffic numbers reported to the merchant. 

Another type of malicious spyware is the “loyalty” software. Affiliates place it on visitors' computers to remind them about the perks and profits of buying these goods from particular merchants. With this software installed, the user reaches the merchant’s website through the affiliate’s link. And fraudsters, as is often the case, claim their unfairly earned commission.

4 ways to prevent affiliate fraud 

No one is immune to affiliate marketing fraud, and there’s always a chance that malicious actors are targeting or already exploiting your business. Checking the quality of your affiliate network is imperative, especially if you’re the owner of a small or freshly launched business.

There are several ways to prevent affiliate fraud and the negative consequences of fraudulent affiliates operating on the market.

Select affiliates carefully 

Start being cautious about your potential affiliate partners from the very early stages. For instance, you may follow a multi-step application process and confirm new affiliates manually. When testing potential affiliates, you have to make sure they have a legit website and their content is tuned to your company’s products. 

Once a new affiliate is accepted and you start cooperating, it’s vital to make your terms and conditions clear and transparent to avoid further misunderstandings. It’s always better to have a legal expert watching over your policies to ensure there are no gaps that can be used for affiliate fraud and abuse.

Monitor traffic 

Regular and active monitoring of your affiliate analytics puts you in a better position in terms of fraud detection. You can locate suspicious traffic upturns, page redirects, or an unusual amount of transactions from the same IP address. 

Keep track of your affiliates and carefully log in their IDs to your system so you can see how many users they bring and what share of them completes the conversion stage. After a while, you will have enough information to analyze your affiliates to distinguish conscientious partners from fraudulent ones.

Allow device fingerprinting

Every user landing on your conversion page leaves a digital footprint, consisting of the device information, installed plugins, time zone, etc. This information is called device fingerprinting. Using this data, you can build profiles of your visitors and see if there’s any suspicious activity. For example, if you notice exactly the same configuration appearing on your website over and over again, there’s a chance it’s a fraudster trying to trick your system.

Use proxies

One of the ways to check if your marketing partners are trustworthy is to test the affiliate links. Residential proxies are the most suitable match for this task since they allow checking localized affiliate content using IPs of the required region. 

Besides, if you have multiple affiliate links to check, you would most probably want to automate the process using special software. These testing bots may be seen as suspicious by some websites, which can lead to bans. In this situation, proxies will conceal your real IP address, or you can use rotating proxies to change IPs at your will, thus avoiding bot activity detection. These measures will help you look like an organic user and avoid undesirable blocks. 

Lastly, if you like to make sure that your affiliates aren’t doing anything shady, you’d want to check their activity without being detected. Proxies can grant you superior anonymity to keep an eye on your affiliate program partners without them knowing. 

As you see, proxies are a great tool for affiliate fraud detection. We at Oxylabs strongly adhere to ethical and legal proxy utilization principles and monitor the usage purposes of our proxies via the KYC processes and open Abuse Emails.

Conclusion

While affiliate marketing is one of the most efficient ways to drive traffic to online businesses, it bears certain risks. Flourishing affiliate fraud may severely damage your company’s financial condition and reputation. However, you can always take precautionary measures to prevent affiliate fraud. In particular, you can carefully monitor traffic, enable device fingerprinting, and use proxies. 

If you found this content useful, head for another data driven marketing article for more insights.