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Affiliate marketing has become a lucrative industry, with a market value exceeding $17 billion as of 2023. Yet, as the industry continues to grow, so does the prevalence of fraudulent activity.
Businesses and consumers must make themselves aware of common affiliate marketing scams and take steps to keep their customers’ data protected against fraudsters.
In the following article, we’ll look at how affiliate marketing scams have increased in prevalence and the best ways to avoid becoming the next victim.
Common Forms of Affiliate Marketing Fraud
Affiliate marketing is a lucrative business—the reason that the industry attracts such a high number of scammers. It’s also one of the best ways to generate revenue with no money. Affiliate marketing drives more than 16 percent of all e-commerce sales in the United States and Canada.
Brands have noticed how partnering with influencers can impact sales and have launched affiliate marketing networks. More than 80 percent of brands have some type of affiliate marketing program available.
Scams targeting affiliate marketing have damaged the reputation of brands and legitimate affiliate marketers. In fact, affiliate marketing fraud rates have nearly doubled in the past two years, costing companies an estimated $3.4 billion in losses in 2022 alone, according to a recent study from CHEQ.
Companies have also sustained significant losses as commissions are paid out on fraudulent leads and transactions. With new technology, the scams have become even more high-tech.
The following are commonplace cons associated with the affiliate marketing industry:
#1 Fraudulent Leads
One of the most common types of affiliate marketing schemes is the generation of fraudulent leads. Scammers will manipulate the system by generating fake leads or claiming sales that they did not direct to the website. The fraudulent leads can result in excessive payouts for scammers. In turn, there’s a loss of income for legitimate affiliates and damage to the brand’s reputation.
One type of tool used by scammers to gain fraudulent leads is a mechanism known as a click injection. A click injection works because a cybercriminal uses an app to insert a fake click before a real click on an affiliate link gets completed. Instead of the credit going to the real marketer, the scammer receives the commission on the sale.
Another strategy to gain fraudulent leads is the creation of deceptive reviews. Scammers make bogus claims about a product to lure users into purchasing through their affiliate links. For instance, a fake review praising a delivery service is posted to convince users to click on an affiliate link, leading to potential financial losses. The affiliate marketing fraud takes away from connecting individuals with a legitimate service.
#2 Click Spamming
Scammers employ networks of bots that mimic human behavior to get thousands of clicks. With the technique, they earn commissions without generating meaningful traffic or conversions to sites by artificially inflating click volumes.
Invalid clicks are often challenging to detect because software can imitate real users to make the clicks seem to come from legitimate shoppers. New technology featuring machine learning has proven to offer better detection than older software programs.
#3 Spoof Traffic
To avoid detection by software, scammers within the affiliate marketing sector have used spoof traffic as an effective tool. Spoof traffic manipulates the original source of the clicks. They use proxies and other methods to hide their actual location and can make the clicks seem to come from different world regions.
Bots generate artificial clicks on affiliate links or ads to force companies to pay for engagement from users who don’t exist. The practice costs legitimate marketers their money because the scammers steal real traffic.
Another source of spoof traffic comes from URL hijacking. URL hijacking occurs when scammers purchase domain names similar to legitimate companies. The URL of the scam site may have a slightly different spelling that is challenging to catch at first glance. They then use these domains to redirect users to the actual website after triggering an event click. This way, scammers can earn commissions for sales through their affiliate links.
Browsers like Microsoft Edge have available tools to detect spooked URLs. A warning message will appear on the screen before a user proceeds to the fake site, alerting the person to the fraudulent URL.
#4 Cookie Stuffing
Cookie stuffing involves fraudsters automatically dropping cookies on users’ browsers without their knowledge. The cookies remain undetected, and they receive commissions from sales that they didn’t have any effect on. For instance, a user clicks on an affiliate link, and cookies get secretly stuffed in the browser. When the user makes other purchases later, the scammer continuously receives commissions.
Adjusting your device settings is the easiest way to stop cookies from getting dropped onto your browser. Each browser, including Google Chrome and Microsoft Edge, will have options to block cookies when navigating the web.
#5 Malware
Scammers have designed malware to insert affiliate codes into a person’s computer without their knowledge. Each time the infected device is used to purchase, the scammer receives a commission.
One method that scammers use to get malware onto devices is through coordinated phishing attacks. A phishing attack can occur via email, social media, or web browsing. Once the user clicks the link, the malware gets downloaded onto the device.
#6 Brand Bidding
Brand bidding is used in paid marketing to perpetrate an affiliate marketing scam. Individuals pay to include an established brand’s name as a keyword to drive site traffic. By using a brand name not associated with the product or service, a company will make commission payments to fraudulent affiliates.
You’ll likely encounter countless ads for fake products and services online. The intent is to send the user to a product page for something that doesn’t exist. The phony product will get promoted under a luxury brand to gain consumers’ trust.
Spider AF recommends that companies protect against brand bidding by closely monitoring their paid ad campaigns and flagging any unusual activity. Companies can also bid on their brand names to prevent scammers from using them.
Detecting and Preventing Affiliate Marketing Fraud
Companies and legitimate affiliate marketers can be proactive against scams. Software and other tools assist with reducing affiliate marketing fraud incidents within the industry. The following are the top strategies to stop affiliate marketing fraud:
#1 Conduct Evaluations of New Affiliates
Any company that onboards new affiliates will want to evaluate the marketer to confirm their legitimacy. Affiliate marketing partners should not have access to the program automatically but, instead, go through a vetting process. A few signs of problematic new affiliates include:
- Fake contact information,
- Lack of communication,
- Instant high conversion rates,
- A large percentage of chargebacks.
Before approving any new affiliates, your brand should review current terms and conditions to make your expectations apparent. List any fraudulent practices that will result in immediate termination and loss of future payouts.
Inform the affiliate that spooking, click spamming, and fake leads will not be tolerated. A contract before working with affiliates helps avoid any disputes that could come up due to fraudulent clicks.
Be ready to enforce your policies if a scammer does attempt to infiltrate your program. If your company has a reputation for not tolerating affiliate marketing fraud, you’ll likely dissuade scammers from joining in the future.
#2 Review Companies Before Joining
Legitimate affiliates should also practice caution before joining any new programs. Never enter an affiliate program that asks for upfront payment. Paid networks often get revealed as scams and may result in your financial information getting stolen.
Another type of affiliate marketing scam to avoid as a promoter is any offer that sounds too good to be true. Scams attract new victims by promising a large amount of money in a short amount of time. The scam intends to increase clicks and potentially use a phishing attack on the user. Ads with poor images or obvious spelling and grammar mistakes can often help you identify an affiliate marketing scam.
Research an affiliate marketing program before joining. Search online for legitimate reviews and get feedback from other platform promoters.
#3 Cloak and Monitor Affiliate Links
One way to assist brands against affiliate marketing fraud is by cloaking affiliate links. To do so, you’ll shorten the URL to dissuade URL hijacking. An added benefit of shortening URLs is the practice also makes the web address more user-friendly.
Legitimate marketers also benefit from the practice of cloaking affiliate links. If you don’t shorten the link, scammers can copy and use the URL for their own fraudulent purposes. After the link is cloaked, marketers and brands can better monitor the source of their traffic.
#4 Use a VPN for Work Computers
Another effective measure to enhance your affiliate program’s security is using a VPN for work computers. A VPN encrypts internet traffic and masks the user’s IP address—making it more difficult for scammers to track and manipulate affiliate links.
VPNs work on all devices, including Apple MacBooks and iMacs. Using a Mac VPN throughout your company can add an extra layer of protection to your program and minimize the risk of affiliate marketing fraud.
#5 Create a Fraud Detection Team
Anyone with an affiliate marketing program should have a staff dedicated to protecting the program’s legitimacy. Developing a long-term fraud mitigation plan will give the team a set of standard operating procedures to follow. Within the plan, you could outline the process for identifying and reporting fraudulent affiliate activity.
Stay current on the latest industry tools to detect affiliate marketing fraud. Software programs help flag any problematic accounts within your network to save time on manually identifying possible affiliate marketing fraud.
FAQs About Affiliate Marketing Fraud
Before finishing up, let’s answer some frequently asked questions:
Q1. What Is Affiliate Marketing?
Affiliate marketing is a performance-based marketing strategy where businesses reward individuals or other businesses (affiliates) for driving traffic to the business’s products or services and generating sales or leads. It’s a form of online marketing where affiliates earn a commission for each customer or prospect brought in through their marketing efforts.
A Few Final Words
Affiliate marketing fraud is a growing threat, resulting in scammers bringing in a lot of cash by using spoofing, click spamming, and malware to work the system to their advantage.
Not addressing affiliate marketing scams will cost a business in more ways than one. Along with losing money, the fraud hurts a brand’s reputation and dissuades legitimate promoters from joining the network.
Stay vigilant on any unusual activity within your affiliate network to remain protected. And don’t forget to use software tools to identify affiliate marketing fraud and eliminate threats before they undermine the success of your program.
