Affiliate Marketing Fraud – How Big of a Problem Is It?

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It’s hard to know what to believe online.

There is so much information about there that it stands to reason that some is going to be fake. Affiliate marketing is no different and affiliate marketing fraud by malicious individuals or groups is on the rise.

Click fraud is rising by 50% per year and in 2016 there was just over $7 billion lost to digital ad fraud.

If you are new to affiliate marketing then it can be hard to see how affiliate fraud is a thing. After all, you need to refer real people to products and services and they need to make a purchase, right? Well, not always and affiliate fraud also covers things such as cost per click, cost per action and it takes many types.

In this article, we are going to look more in-depth at affiliate fraud, how it works and what can happen if it occurs.

marketing fraud types

What is affiliate fraud?

When you sign up to an affiliate network to promote products, you also sign up to a set of rules. The same applies to CPA, CPC, and other advertising methods.

Affiliate fraud is basically breaking these rules and breaking the agreement that you have signed up to. We are going to look at some of the specific types of marketing fraud below and blackhat affiliate marketing is growing. That isn’t to say that it hasn’t been around for a long time. Black affiliate programs and fraud activities are nothing new in the online advertising world.

For some people, it is attractive to find shortcuts to make a quick buck and they don’t want to go through all the effort of actually building a sustainable business model.

Different types of affiliate fraud

There are different varieties of affiliate fraud that malicious individuals and groups use to make money.

#1 Spoofed traffic

One of the most common methods of affiliate fraud is spoofed traffic. This applies to many advertising models such as CPC.

People get paid because they refer targeted and specific traffic to a source. Blackhat marketers will make a huge amount of traffic look legitimate even when it is not. For example, this can be bots or automated software sending traffic to a page and perhaps they make it look like they are coming from one location when that isn’t the case.

This ties in with our 4 type of affiliate marketing fraud at the bottom of this list – form filled leads – and we’ll talk about that later on. Bloomberg published a report that found
that 94% of 30,000 visitors to one source were bots and fake traffic.

#2 Unauthorized sources

The second type of affiliate fraud tactic that is often utilised by blackhat marketers is getting traffic from unauthorised sources.

This means that the traffic that is clicking on ads, signing up via forms or visiting websites is being sourced from places that are outside the terms of the affiliate agreement. As we
mentioned above, the advertiser will have specific and set terms as to what traffic is allowed and what isn’t. It can be hard for affiliate fraud detection services to sometimes pick this up but if caught then it’ll violate the terms of the agreement.

#3 Traffic that’s incentivized

Fraud activities take many different forms when it comes to affiliate marketing and in nearly all cases a marketer can’t make sure of incentivised traffic to drive it to an offer.

What we mean by this is that something is offered in return for the users information and then that users information is passed onto the advertiser. This kind of traffic is often of much lower quality than traffic that hasn’t been incentivised so it is unlikely to lead to any sales. This type of traffic will generally only do the bare minimum of what is necessary to get their incentive and won’t do anything else beyond this which results in very poor leads with barely any potential for sales. This incentive could be in the form of loyalty points for a service, cash or really anything that someone will get for completing the action you want them to.

#4 Form filled leads

The final type of affiliate fraud is form filled leads.

A business relies on its leads. It is these leads that, funnily enough, led to a sale and without them the company or individual won’t make any money. Many firms pay for these leads however what blackhat marketers do is fill these forms with useless leads that won’t go anywhere. It could be supplying peoples’ information without their knowledge and they have no interest in the products and services that are being sold or if could be reusing this information from previous campaigns.

These fraudsters can make money from advertisers with this method however it will violate the terms of the agreement.

Blackhat affiliate marketing and fraud

Marketing fraud and specifically affiliate marketing fraud can be a big problem. It is not a new phenomenon and it has been around for years – since affiliate marketing became a thing really – however it is growing.

We have mentioned just 4 ways in which these marketers carry out their fraud activities and even though affiliate fraud detection services are improving they still can’t catch all the different methods that are being used at the minute.

The consequences of affiliate marketing fraud can be very serious if you break the terms of service. This can result in your account being banned, being blacklisted from affiliate networks and many fraudsters often have legal action taken against them due to the severity of the malicious activity.

Our best advice is to stay on the right side of the terms of your affiliate agreement. We’ve probably all thought about making shortcuts at one time or another, however, it doesn’t pay in the long run and can actually get you banned from affiliate networks which harm your chances of ever making a living from affiliate marketing and advertising.

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