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Affiliate marketing fraud
Affiliate marketing fraud involves the fraud by advertisers, affiliate networks / agency or by the affiliates.
Advertisers do fraud because they can save money which they have to pay to affiliates. Affiliates do fraud because they want to earn more money from the advertisers. Affiliate network and agencies do fraud to cheat advertisers or affiliates.
Frauds by Affiliates:
Fraud or fake transactions:
There are many black hat affiliates who use fraudulent techniques to generate fake clicks, leads or transactions. The most common example is to fill fake leads. The affiliate fills fake leads with fake information to earn commission. The serious offences are like stealing credit card information from people and using them to make purchase.
Parasites:
Fraudulent affiliates used adware and other malicious applications of scripts and overwrite cookies of the genuine affiliates with the frequent affiliates. In this way the genuine affiliate will not get paid and they will move on.
Typo squatting:
Affiliates registers look a like domains same like the merchants and then sign up with the affiliate merchants and make money. Example like Makemytrip.info (Original MakeMyTrip.com), Yaatra.co.in (Original Yaatra.com) etc.
Copycats:
Copycats are the sites having the same look and interface as merchant's site. They sign up with merchant's affiliate program and earn commission when a confused visitor the merchant from these sites.
Email spammers:
A special category of email marketers who join affiliate programmers and then send spam across thousands of email and earn commission when a visitor clicks on those emails. They are harmful to merchant as the brand can be diminished.
Frauds by Merchants:
Declining sales or leads:
This is the most common practice where the merchant declines a lead or sales only for the sake of not paying the commission to affiliate. Merchants even don't care to give the reason. (I had worked with many merchants and found some who are doing this).
Altering affiliate tracking system:
There are many merchants who intentionally modify the tracking system so that all leads/sales are not reported. This happens during the festive season when the merchant expect to get more sales and they use these types of unethical business practices.
Offering those products which don't sell:
There are many fraudulent affiliates who use affiliate marketing channel just for branding. They offer a limited number of products to promote to their affiliates which don't get sold.
Frequently turning on/off the campaigns:
This is a method to cheat the affiliates. Merchants cheat the affiliates by frequently turning on/off the campaigns during the peak hours and in this way they can stop many sales from getting tracked.
Frauds by Networks:
Playing with CPA rate:
Affiliate Networks increase the commission to lure the affiliates and manipulates the sales so that they are not shown to affiliates but shown to merchants.
Last but not least, a different type of threat to affiliate marketing is the affiliate code alteration by the webmaster or web hosting service provider. You have hosted your website on some cheap servers and they will replace your affiliate ID with their unknowingly to you and then reset back. In this way you can lose a lot. Beware!!
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