Affiliate Fraud Detection: How to Make Sure Your Business Is Safe

Accounting for billions of dollars in lost revenue, affiliate marketing fraud is something you want to avoid, only buying legitimate leads or generating leads that match the advertiser’s expectations. Whether you’re an advertiser, affiliate, or affiliate network, you’d like to be safe at all costs.

There are lots of ways and approaches to affiliate fraud prevention, but the only strategy that actually works is a comprehensive one, when you’re screening dozens of parameters to come up with an overarching risk profile for the lead in question.

Take this quiz to learn your marketing fraud prevention proficiency.

Unfortunately, it’s not getting easier with the development of artificial intelligence. Not only can AI work for you, but it can also work against you, empowering bad actors with faster and more elaborate ways to generate fake leads.

But that’s not going to happen if you’re using Phonexa.

“You need Phonexa to squeeze the most revenue out of the calls, to monetize them as well as possible, keep fraud out of the picture, and keep everyone happy on both sides of the equation.” – Evan Weber, an expert in B2C and B2B digital marketing and online advertising, from Phonexa’s Amplify webinar series

 

We’ve developed one of the most secure performance marketing ecosystems in the market, enabling affiliates, advertisers, and affiliate networks to control the leads and phone calls they buy, generate, or process. Our proprietary lead management solutions work in sync to protect you from low-quality, irrelevant, and fraudulent traffic.

Take a product tour to see how Phonexa’s performance marketing tools work together.

Read on to uncover the best affiliate fraud detection and prevention strategies.

5 Most Egregious Affiliate Fraud Techniques to Watch Out For

First things first: Know thy enemy. 

Affiliate marketing fraud techniques are getting ever more complex and nuanced, but most of them still fall under one of these categories:

• Lead generation fraud: Fake, recycled, and mixed leads, as well as misleading offers and lead farms, are the most notorious manifestations of lead generation fraud, when you’re getting either non-existent leads or leads that are unlikely to convert.
• Click fraud: Click farms, bots, and scripts can tarnish your pay-per-click affiliate marketing model by generating fake clicks that you pay for. Even for pay-per-lead and pay-per-sale, fake clicks may distort your idea of the value of an affiliate or traffic source.
• Cookie stuffing: Cookie stuffing boils down to secretly placing a cookie in a referral’s browser, as if they’ve clicked your affiliate link, though they didn’t. Cookie stuffing may take the form of pixel, image, ad, and link stuffing, all of which are illegal.

Read also: Your Complete Guide To Cookieless Affiliate Marketing

• Ad stacking: It involves placing multiple ads on top of each other invisibly to users, so each page visit generates impressions for all ads. It goes without saying that advertisers aren’t happy to pay for the ads that were not actually displayed to the user.
• Trademark bidding: Bidding on branded keywords that legally belong to other companies is forbidden. For example, users typing in “Big Mac” expect to see a product from McDonald’s, not one from some random company they have never heard of.

Check out my blog on the types of affiliate marketing fraud.

The good news is that an advanced lead management software suite like Phonexa can protect you from most, if not all, fraud attempts, keeping you safe at all times. And all that can be done in the background automatically after you’ve set up your lead and phone call infrastructure.

Book a demo with Phonexa professionals to learn how you can protect your business from fraud.

How To Prevent Affiliate Fraud with Phonexa

Phonexa’s all-in-one performance marketing software suite tracks dozens, if not hundreds, of parameters on leads and phone calls you buy or sell, including real-time screening before you’ve made a purchase or submitted the lead to the network for sale.

All our clients get access to iClear, a built-in lead verification tool that enables:

• IP verification
• Email verification
• Phone verification
• ID & background verification
• Address verification

On top of that, iClear helps ensure that the leads you buy or sell are compliant with the TCPA, FDCPA, FCRA, and CFPB regulations.

Affiliate Fraud Prevention with Real-Time and Post-Purchase Lead Verification

Every check with iClear can be executed synchronously or asynchronously:

• With a synchronous check, the system doesn’t proceed with the lead purchase until the check is done. Then all leads that have passed the screening are purchased, while the rest are rejected or flagged for manual verification.
• With an asynchronous check, the system proceeds with the lead purchase while simultaneously checking the lead. The main difference is that the purchase is made regardless of whether the lead has passed the screening.

At first sight, synchronous checks might seem a superior option. However, in competitive markets, where acquisition speed may determine whether you can secure the lead, it may make sense to minimize buying time by not pausing for lead verification.

Should You Verify All Your Leads as an Affiliate Fraud Prevention Measure?

With Phonexa, not only can you enable or disable lead checks, but you can also choose what percentage of leads – and leads matching what parameters ­– you want to verify. For example, when buying leads from new traffic sources, you might want to check them all, while only verifying a small random percentage of leads coming from historically reliable affiliates.

➥ Randomized lead verification minimizes operating costs while maintaining full control over lead acquisition campaigns. Whenever you’ve spotted a negative trend, like more than the minimum reasonable number of leads being rejected, you can look into it to find out why the leads offered don’t match your expectations.

However, the type of check you want to run depends on your business objectives, risk tolerance, and budget (speaking of which, Phonexa offers one of the lowest rates for lead verification). To be on the safe side, look for the convergence of several checks.

Book a demo to explore affiliate marketing fraud prevention strategies with Phonexa.

IP Verification for Affiliate Fraud Prevention – $0.0007 per ping

IP verification may be the most practical fraud prevention strategy, enabling you to detect traffic originating from proxies, VPNs, and TOR networks, as well as potential mismatches, such as discrepancies between the IP-driven location and the location specified on the form.

However, from the practical standpoint, you might not even need to go granular. Instead, you can set the minimum risk score for your leads, and the system will reject or flag all leads that haven’t achieved the required minimum.

Example: You’re offered the following lead:

• IP address ­– 203.0.113.45
• Phone number – +1 347-555-0100
• Location specified on a form – New York

In this case, iClear would identify a mismatch between the location put on a form and the IP-derived location (Nigeria). The lead will either be rejected or flagged for manual verification, depending on the system settings.

Read also: How To Verify the IP Address of the Leads You Buy

Email Verification for Affiliate Fraud Prevention – $0.0005 to $0.003 per ping

For lead campaigns where the lead’s email address serves as the primary point of contact, email verification is crucial. You can filter out emails with invalid domains and then perform real-time validation of the remaining emails to categorize them as Valid, Risky, or Toxic.

And if you want to go really deep into the lead’s email metrics, you can get an overarching risk score based on the email’s reputation and recent behavior, reflecting over a dozen affiliate marketing metrics in a single numerical value that triggers an accept or a reject for the email in question.

Here are some of the email metrics you can check with iClear:

• Email delivery status
• Whether an email is disposable, a spam trap, or a honeypot
• Whether the domain is reputable, a catch-all, or associated with abuse strategies

Important: You don’t necessarily have to reject all mismatching emails. Sometimes, especially if several checks you’ve done indicate different risk scores, it might make sense to verify the lead manually.

Read also: Email Verification To Grow Your Lead-Reliant Business.

Phone Number Verification for Affiliate Fraud Prevention – $0.0005 to $0.005 per ping

For call-reliant businesses, you may not only want to verify the source of the call but also examine in-depth parameters, such as whether the call is originating from a mobile, landline, VoIP, toll-free, or prepaid line, as well as whether the phone number itself is accurate, active, and reachable.

➥ Phone calls are generally more expensive than web leads, and conversion rates are significantly higher. In high-ticket industries, where calls may cost $50 to $100 and more per call, you’d like to ensure the calls you’re buying or selling are legitimate.

Example: Running phone verification when buying phone numbers can help safeguard you from purchasing an unreachable number, such as +1 555-123-0000. iClear would identify the 555 prefix as unreachable (numbers with the 55 prefix are placeholders for TV and movies, not belonging to real consumers) and reject the offer or flag it for manual verification.

To be on the safe side, you may also want to screen all phone numbers against national and state Do Not Call (DNC) registries to ensure you’re permitted to make a call. As a buyer, you may also want to obtain a consent record as proof that the consumer you’re contacting has authorized marketing phone calls from your company.

Read also: Phone Number Verification to Protect Your Business from Unwanted Calls

ID & Background Verification for Affiliate Fraud Prevention – $0.11 to $0.30 per ping

Identity and background verification is one of the most in-depth checks you can perform with iClear, including industry-specific details, such as the lead’s bankruptcy records. However, you can also limit yourself to a more basic ID verification if that aligns with your goals.

Example: You’re offered a lead with the following data:

• Name: John Smith
• Date of Birth: 07/15/1987
• Address: 123 Oak Street, Denver, CO
• Phone: +1-303-555-0142
• Email: johnsmith87@gmail.com
• SSN (last 4): 4321

With iClear, you can verify whether the provided information matches the national customer databases to confirm that John Smith is a genuine consumer with an SSN ending in 4321. You can also check their address history, phone ownership, email risk score, and background records.

As always, what happens next depends on how your system is configured. For example, if the check showed a high email risk score, and the phone number was registered only a few days ago, the lead might be auto-declined or reviewed manually as long as you’ve set the respective rules.

Read also: How Lead Identity & Background Verification Can Grow Your Profits

Address Verification for Affiliate Fraud Prevention – $0.0005 to $0.02 per ping

Address verification is a go-to check for businesses providing on-site services, such as home improvement companies and solar installers. With iClear, you can verify the validity of the address entered by the lead on a form, either rejecting leads with invalid addresses or issuing auto-prompts to them. Likewise, you can determine the lead’s approximate location by their phone number.

Read also: How Address Verification Can Help You Purchase the Leads You Need

Important: With numerous possible fraud prevention strategies and configurations, it may not be easy to determine the best one for your business. So instead of relying on what intuitively seems right, it makes sense to A/B test various flows to identify which one works best for your specific goals.

Get started with Phonexa to uncover your best performance marketing software suite.

Get Your Fraud-Proof Performance Marketing Software Suite

Whether you’re buying or selling web leads or phone calls, Phonexa creates a secure environment for your business by enabling cost-effective, real-time lead screening, allowing you to set up any screening depth and scope. Through continuous data exchange between tools, you can track leads more effectively, including when they switch touchpoints.

“The US ad industry alone is reported to have grown by around 5% annually across 20 forms of media, and it’s not going anywhere soon. So realistically, you just need to make sure that you are giving yourself the best chance, giving yourself the armory and the tools in place to actually stay ahead of that curve or at least be part of that curve and not be left behind.” – David Pickard, CEO at Phonexa, from Affiliate Marketing Podcast

As a Phonexa client, you gain an easily manageable lead system that consolidates all essential data into a single dashboard. This allows you to focus on the metrics you need without losing sight of the bigger picture. From general-level to in-depth insights, you can quickly access the data you need without having to switch between systems and reports.

 

Here are two core solutions you get at a single price:

And here are the six extra features you get along with these core products:

Take a product tour to experience Phonexa in action.

Frequently Asked Questions

What is the most effective affiliate fraud prevention strategy?

When it comes to affiliate fraud prevention, the most important thing is to verify incoming traffic before you purchase it, especially if you’re getting it from a new affiliate or source. For verified sources, you can vet inbound leads without pausing the buying process, allowing you to be fast in competitive markets while maintaining control over the quality of traffic you receive.

The rule of thumb is that comprehensive fraud prevention software like Phonexa’s iClear works best because it allows you to screen leads and phone calls across multiple parameters – phone number, email address, ID, location, and industry-specific data like, for example, criminal records – rather than focusing on one parameter that may not accurately reflect the quality of the lead.

What does affiliate fraud detection software include?

Affiliate fraud detection software includes tools that allow you to track the lead’s data and compare it with your internal and external databases. For example, Phonexa’s iClear enables you to verify the lead’s identity and phone number, as well as perform industry-specific checks.

At the same time, you can design the screening process however you see fit, only enabling checks that make sense for the specific campaign and type of leads you’re buying. For example, when working with financial leads, you may want to run checks for liens, judgments, foreclosures, and bankruptcies.

How much is affiliate fraud detection software?

With Phonexa, you get affiliate fraud detection software included in your subscription plan, and then you can decide on the scope and features you’re going to use. In general, comprehensive checks are more expensive; however, all checks cost less than a cent, with some costing a fraction of that.