What is Affiliate Fraud? The Definitive Guide for Marketers
Affiliate Fraud! This is probably the most feared activity in the affiliate marketing industry.
No surprise! Affiliate fraud is an alarming and unethical activity! It can be a problem in affiliate marketing but also in many other fields and industries.
It’s powerful and viral, just like a plague.
One of the challenges to tackle in 2017 for the mobile marketing industry is precisely the fraud subject.
Sadly, this industry is still haunted by this nefarious practice. Terminating it swiftly is the ultimate goal.
Now that’s the daily challenge!
The business is on the rise, and so have been the methods and schemes associated with fraud. There are a whole lotta ways of committing this vile crime, so it’s important for me to address the several different threats and their evolution right here, right now.
In this article, I’ll not only refer to some affiliate fraud methods but will also show you guys how the issue of fraud affects the whole mobile ecosystem.
…even you, a fellow who just wants to play the game fair and square.
To get things started, let’s first define the general concept or what we perceive as fraud.
What is Affiliate Fraud?
Affiliate fraud is broadly understood as a non-compliance to the rules. Therefore, fraud may refer not only to what you do with your traffic, but also to your strategies to draw traffic, the creatives (banners or pre-landers) you use on your campaigns or even the documents that you upload on your affiliate network platform.
Every action performed which isn’t compliant with the rules. Any type of illegal activity designed with the intention to cheat users, buyers or companies.
There are many activities that you can perform that’ll surely get you labeled as a fraudster. As I’ve pointed out before, there’s a bunch of stuff that can be considered fraud.
What Can Be Classified as Fraud?
Wanna get to know the things that are normally deemed to be fraud?
For starters, fake leads. These are very popular amongst fraudulent practices. Basically, I’m referring to affiliates who create software that actually mimics human behavior and generates fake conversions on offers.
Another popular way of misleading your affiliate network, and which is related to the previous one, is to do what’s commonly known as a proxy sale.
This means that the affiliate is using a VPN to ‘send traffic’ from a country that pays better for their conversions – the affiliate does not actually promote the link, but instead tries to hoodwink the affiliate network, making the people responsible believe the conversions are real.
Why do they do that?
To receive the payment from those big payouts, that’s why!
Luckily, affiliate networks have developed ways to identify these tricksters and immediately block their access to the offers.
If you thought you could just fool everyone, play the game like you were a train robber in the Wild West hooked on steroids, and make loads of money by cheating the affiliate network… Well… Think again!
More than ever, the detection of these activities is improving drastically! We don’t play around, ya feel it?
“Our only focus is the way affiliates monetize! We go into detail, analyzing affiliates and how they lead users to a specific advertiser’s landing page. It’s that simple!” Nicolas Top, Controlling Supervisor at Mobidea
Another popular type of fraud is using methods involving incentives on offers that don’t allow that kind of paid promotion. Affiliates who force users to make a specific action on an offer page aren’t welcome.
The same stands for users who’re motivated to subscribe to an offer because they know they’ll get something in return. Once again, the user subscribed because they wanted something other than the offer.
You’ll find that this business has already found time and place for incentivized offers. You can play with them, no doubt about it. Incentivized. Remember the name. Those are the ones that should be used in case you wanna lure people into clicking away!
A non-incentivized offer appearing as an incentivized offer? It’s a huge crime!
It should be forbidden to make people perform the action you want them to. You can’t force someone to buy an apple if they want a banana instead.
In fact, if the customer doesn’t want it, you don’t give it to them! That’s bad business and a lousy practice!
A type that’s usually not regarded as fraud by affiliates is the incorrect use of creatives to promote the offers. Well, don’t be fooled: different countries, different operators and different regulators have different rules and you can’t be promoting an offer for WhatsApp with a Candy Crush banner.
Don’t use a topless banner in a country that only allows for a sexy banner.
NEVER use misleading banners to promote your offers and you can’t use non-compliant banners to attract more users.
Play the game according to the rules and you’ll have no problems. Defy the rules and set yourself to end up excommunicated, which is exactly what you deserve.
What Happens When Fraud Happens?
I’ve approached some of the most popular types of fraud that are common in the industry. Now, I’ll show you guys how these heinous practices affect everyone involved in the business.
There are several consequences when affiliates decide to trick the system (and fail miserably.)
For the person committing the fraud, there’s a direct and an indirect consequence: the former is basically the cruel fact that the user will be blocked on the affiliate network to where they’re sending their traffic; the latter comes attached to the former and it’s the fact that they’ll basically be blacklisted in the industry.
Remember: affiliate marketing is a community project.
In fact, affiliate networks share knowledge about their affiliates. This means that having a bad reputation can get you rejected all over the globe!
Fraud is also a bad practice for all the other law-abiding affiliates. This business is the sole income source of a whole lotta people from different cultures, religions and countries all over this green earth.
These folks rely on everything to work smoothly so they can generate some income and create a life they can be proud of! Don’t you mess with that, bro!
As you know, this business is all about data. Affiliate marketing players rely on this data to make their decisions and optimize like kings.
Now, let’s say that there’s fraudulent data polluting a great deal of clean data?
Maybe the affiliates ask their Account Manager, check which GEOs are working well, which offers are converting, etc.
You know, the normal stuff.
Now, with this new info, the affiliate goes out and starts working on freshly recommended Offers and GEOs.
Suddenly, all is going crazy! All hell breaks loose!
Offers stop converting and there’s no traffic at all. What the heck is going on? Who’s to blame?
The affiliate network.
Why? Because it was providing the wrong info.
Whose fault was it? The smart guy who became a fraudster just to create some chaos and profit illegally!
The smart guy who decided to jeopardize the whole game.
Who gets the bad reputation? The good people responsible for managing the affiliate network.
Even so, this is only the tip of the iceberg. There’s a chain reaction when an affiliate commits fraud.
Everybody knows the consequences for the affiliate and other affiliates too, but there’s still more to this subject than just consequences for the affiliates.
How Everyone Bites the Dust
Let’s make it even clearer. I want you to really understand how everyone gets affected in this business.
Imagine you’re a business owner with a cool product on your hands and you wanna make sure you get in in the market. To help you with this task, you find some motivated, hard-working guys willing to go out everyday and promote your products!
That being said, you eventually happen to strike a deal with them: for every new customer they manage to get you, you pay them a fee for their work!
All’s wonderful! Everyone’s winning. You, as the product owner, will get a larger audience and reach for your product while at the same time sharing the benefits of the product with other people willing to work with you.
Everyone’s getting a piece of the cake! This means that – after a hard day’s night – your ‘freelancers’ come back to you with some hot leads: there are basically lots of people interested in the product!
You start contacting some of those hot leads and then you find that most of them don’t exist. The phone numbers don’t exist, the emails have never been created, and the names are the creation of an evil monster.
It’s all a lie. You’ve been deceived! Before you came to an agreement, you paid what you promised but the other part did not come through.
Following a rational logic, what would you do?
You’d never try to have someone promote your business ever again, since you know you’re exposed to fraudulent activities from people who just want to fool the system.
It’d be harder for you reach more people.
Moreover, the few trustworthy people willing to work for you will no longer work since you’re not taking any help now.
Bottom line: everything’s more complicated and you’re not sharing the fruits of the labour with other people.
Well, the same logic applies to this business. An Advertiser trusts an Affiliate Network to run the Offers it’s got.
If people come and start doing affiliate marketing like there are no rules and doing whatever they want, things aren’t gonna turn out so well for you, for the affiliate network, or for the advertiser.
The Advertiser’s View
In order to avoid fraudulent activities, Advertisers can change the conversion flow of the offers – from a direct billing, with one click, to an SMS billing.
Related Content: Mobile Billing: The Most Popular Offers’ Flow
Conversion rates will decrease and the revenue generated for this Offer – from this specific partner – will decrease.
Everyone will receive a lower share of money and business will be tougher to come by. It’s harder to get the conversion.
Throughout the following days, with new fraudulent methods being used to mess with their offers, Advertisers can become impatient and even go to the extreme of ending the partnership with the Affiliate Network, therefore affecting everyone willing to work (fairly) with the offers.
Although our relationship with partners is very good, we’ve still gotta manage it all the time, mainly due to situations such as this one. And even though it’s a good relationship, this is a zero-tolerance business!
Trust me: when I mean zero tolerance, I really mean it! When it comes to business, it’s business. Even if everyone’s friends.
Due to some numskulls who love to come up with ways to mess everything up, other fair players will eventually have to pay the price!
Honestly, I can tell you that we’ve already lost some valuable Advertisers because of situations like these on Mobidea.
Advertisers weigh in on the pros and cons of having the offers running versus the complaints they receive from Carrier Aggregators.
And you wanna know what’s the decision they usually make?
They may lose something like 5% to 10% of their revenue, but they prefer to stop the promotion of the offer, since it will drop the number of complaints by 50%.
As you can see, this is one of the most dire problems affiliate networks face every single day.
Indeed, the whole marketing industry has got a bone to pick with shady guys doing fraudulent schemes.
Having said this, you can understand why Mobidea adopts a zero-tolerance policy towards fraud. If we didn’t have this kind of policy, we’d be hurting not only ourselves but also other affiliates on our network who are interested in promoting offers in a legit way.
We must protect affiliates that wanna work legit, and that’s why I can say that users who come to our platform to fool the game will be automatically blocked. It’s that simple!
Mobidea’s growing fast: so fast we’ve had to triple the size of our Control Team so as to make sure the traffic that’s being sent to Mobidea is compliant with all the rules of promotion and that everyone stays in business.
We’d obviously prefer not to deny access to the business to anyone. However, we need to vouch for every other player in the business, it being an advertiser or a publisher.
On Mobidea, we only block affiliates when we’ve got reasons to do it. I guarantee that there’s no random selection.
We only block affiliates when we’re sure fraud has taken place.
The best advice I can give you to avoid being blacklisted by the industry?
If you’ve got any doubts about what you’re doing, it’s best to not do it at all!
In case you believe that you’re doing something unethical, you shouldn’t do it. This should be your eternal motto, not only for the business, but for life itself.
The logical association of why less fraud is better is really simple! The less fraud, the less the dirty data; the less dirty data also means better decisions. The less fraud, better will the payouts of the offers eventually be.
The less fraud, fewer people will be doubting this business! We don’t wanna give the business a bad image.
We don’t wanna give it a bad reputation!
Even so, when affiliate fraud takes place, it’s affecting everyone in the industry so let’s destroy it like it’s an obsolete fax machine.