Affiliate marketing is a godsend for lead buyers and sellers alike, with 81% of advertisers and 84% of publishers using it to maximize revenue and campaign impact. Affiliate marketing is especially beneficial for advertisers operating in the insurance, finance, and home services industries, as up to 30% of all sales are generated through affiliate programs, according to the Affiliate Marketing Statistics & Trends Globally (2022) Industry Report.
Now in an ideal situation, you’re building and running a well-structured affiliate network with the goal of working with publishers and advertisers to connect the best quality leads for a given industry. More often than not, however, affiliate marketers face the challenge of preventing activity from fraudulent leads.
But what exactly is a fraudulent lead?
A fraudulent lead is consumer data generated by a publisher using falsified data to present to advertisers as a genuine, high-intent lead. Alternatively, scammers fill pipelines with fake leads to give off the impression that they’re driving high volumes of traffic and conversions which, in turn, enables them to earn higher commissions.
In addition to using fake leads, dishonest marketers rely on unethical tactics to boost their conversion rates. Tactics commonly employed to illegitimately boost commissions include using bots to generate fake traffic for the purpose of click spamming, hijacking URLs to redirect traffic from one affiliate to another, and click fraud resulting from affiliate tracking cookies illegally “stuffed” into a visitor’s browser without obtaining consent.
The Ramifications of Affiliate Fraud
A study conducted by CHEQ, the global leader in Go-to-Market Security, found that fraud resulted in $1.4 billion in losses across the affiliate marketing industry in 2020. Faulty activity is mostly associated with unethical practices used to defraud affiliate networks out of thousands of dollars in commissions, and their hard-earned reputations.
Monetary losses can ravage the operations of an affiliate network and result in a significant loss of business and, ultimately, closure. Although monetary losses are a devastating end result of fraudulent activity, losing money is a secondary effect of affiliate fraud.
One of the consequences of affiliate fraud is the countless hours of outreach time to only find out that your list consists of irrelevant data. This directly impacts the way an affiliate network is perceived by lead buyers because a network that generates and sells fraudulent leads – even if they’re not aware of the quality – inevitably gets saddled with a negative reputation and distrust. By failing to vet the quality of its leads, an affiliate network risks losing buyers who no longer trust its practices.
Strategies and Solutions for Mitigating Fraud
Sustainable success in the affiliate marketing space is based on reputability and transparency, so detecting affiliate fraud is rather challenging on the surface, but it can be accomplished with relative ease with certain protocols in place.
The following are forward-thinking strategies from Phonexa’s team of in-house experts on how to identify affiliate marketing fraud, along with the Phonexa tools affiliate marketers can utilize to vet faulty leads, protect their network’s reputation, and ensure a consistent flow of qualified, high-intent leads.
1. Verify Data Points
According to Phonexa’s Lead Technical Project Manager, Gurgen Keveyan, detecting potential fraud starts with verifying details associated with given lead data.
“Fraudsters are adept at hiding or misrepresenting certain information that can be used to verify their geographic location such as IP addresses, the use of different browsers, and virtual private networks,” Keveyan said. “This underscores the need to verify the validity of all information collected from each data point.”
Consider this example. A publisher intending to commit fraud submits different contact information to generate and sell fake leads to an advertiser. Verifying the name tied to specific phone numbers or email addresses will help uncover if the lead is from a real prospect or from a bad actor. If the name related to a phone number or email address matches the information provided on a landing page form, it’s likely that the lead is real.
“A lead management system like LMS Sync can reveal attribution for all inbound leads by detecting if the same browser or IP address was used to submit different information,” Keveyan added.
Marketers can take lead attribution one step further using Call Logic, Phonexa’s call intelligence platform, for inbound call lead generation, management, and distribution. By utilizing Call Logic, businesses can properly attribute every inbound call and gather deep insights into the behavior of each lead, making it easier to improve the customer experience by streamlining campaigns for high-intent leads.
Call Logic is compliant with STIR/SHAKEN regulations required by the FCC. STIR/SHAKEN protocols are designed to help businesses validate caller sources to deter caller ID spoofing (calls from unverified sources).
Click here to learn more about how STIR/SHAKEN compliance benefits Phonexa clients and other users of third-party call software.
“When used in tandem, LMS Sync and Call Logic can efficiently manage all inbound and outbound call leads by identifying and comparing data points provided by a prospective lead,” says Keveyan. “Leveraging these tools ultimately helps affiliate marketers by enhancing their overall fraud detection functionality.”
2. Monitor User Behavior & Assess Each Lead Individually
Scammers typically rely on set data when filling out landing page forms for the purpose of filling a pipeline with faulty leads. However, user behavior recording and analytics software can help detect fraud by assessing the validity of each lead.
Phonexa’s Senior Onboarding Specialist, Tori Hester, recommends leveraging user behavior analytics to record site activity and identify potential fraudsters.
“The main way a behavior analytics and conversion optimization tool like Phonexa’s HitMetrix can deter fraud is by tracking how users interact with your landing page,” Hester said. “This is accomplished by evaluating how quickly forms are filled, unusual mouse movements, and the use of ‘copy & paste’ functionality to submit information.”
Forms filled out quickly with one or two clicks indicate the use of ‘copy & paste’ and may serve as a warning sign of potential fraud. Although this behavior doesn’t automatically indicate fraud, it can help determine if further verification is required.
“User behavior analytics prove to be invaluable for assessing each lead individually and distinguishing high-intent leads from fraudulent leads,” Hester added.
3. Maintain Excellent Hygiene Through Data Verification
Data verification is essential for combating fraud and maintaining excellent data hygiene. iClear, Phonexa’s fraud detector and email verification tool, offers multi-tiered fraud vetting and prevention functionalities to preserve data integrity.
In addition to verifying email addresses, iClear also verifies phone numbers and IP addresses, allowing Phonexa clients to quickly and accurately confirm important details related to a particular lead. This helps prevent operational disruptions and decreases exposure to potential fraud risks.
“Data verification and hygiene enable users to flag errors and possible risks, thus protecting their bottom line from potential fraud,” said Chelsey Reynolds, Phonexa’s Vice President of Onboarding & Customer Success. “With iClear, affiliate marketers can maintain a clean and efficient lead flow by reducing any data missteps and inaccuracies that can disrupt your operations.”
4. Track Affiliate Links
Click tracking is an essential component of any affiliate marketing platform. With Lynx, Phonexa’s comprehensive click tracking software, advertisers and publishers can mitigate fraud from third-party marketers by leveraging real-time reports on campaign performance, analytics on clicks, and conversion approvals.
“Mitigating fraud requires a forward-thinking approach to affiliate program monitoring. Click tracking software provides tremendous value by helping marketers detect duplicate or fraudulent clicks,” Hester said. “With the right tech stack suited to the needs of the industry you operate in, affiliate advertisers and publishers are better equipped to prevent fraud, establish safe data-driven campaigns, and ensure long-term success for their affiliate marketing program.”
With affiliate marketing increasingly being utilized by advertisers and publishers from various industries, the potential for fraud will always remain present. However, by implementing the aforementioned tools and strategies, marketers will be better able to verify data points and user behavior, evaluate the quality of each lead in the pipeline, preserve data integrity, and track affiliate links with ease. The end result is a well-oiled affiliate marketing program that rewards marketers and benefits users in need of a particular product or service.
Schedule a consultation to learn more about the Phonexa platform and how its all-in-one suite of marketing automation tools and products can power your lead generation tactics and avoid pitfalls.
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