How To Detect & Prevent Lead Generation Fraud

Phonexa

8 minute read

Often considered a pleasant surprise, a traffic spike can also indicate fraudulent lead activity. It becomes apparent as you pay for what seems genuine and fresh leads, only to witness no real conversions.

You’ve likely fallen victim to lead generation fraud, a deceptive practice used by unscrupulous affiliates to artificially inflate affiliate commissions.

Here’s the alarming fact: given that 30% of sold leads are fraudulent, advertisers who neglect to monitor fraud prevention may be losing their marketing dollars at this very moment without even realizing it.

The solution? Read on to discover common lead generation fraud schemes and strategies and how to mitigate them to patch your business vulnerabilities.

Book a free demo and learn how Phonexa’s iClear can help you flag fraudulent traffic and enhance lead quality with real-time validation capabilities.

What Is Lead Generation Fraud?

Lead generation fraud is a deceptive practice of creating fake leads to illegitimately claim affiliate commissions. Such fake leads are often bots or individuals with no genuine interest in the promoted product, resulting in zero actual conversions.

How Lead Generation Fraud Affects Your Business

Types of Lead Generation Fraud

Bot-Generated Traffic

Every year, the number of internet bots increases, inevitably taking over a share of affiliate traffic.

Source: Securityweek

Lead bots use AI technologies to bypass CAPTCHA filters and flood your system with hundreds of lead forms containing fabricated information. 

Incentivized Traffic

Although incentivized traffic consists of real users with genuine data, they couldn’t care less about your offer. How’s that? They fill out forms to receive rewards – such as gift cards or discounts – from other businesses, while your product or service is likely out of their field of interest.

Stolen Personal Data

Fraudsters complete lead forms with phone numbers, emails, addresses, and users’ names acquired through data breaches. Again, contacting these leads exposes your business to penalties, but it’s not just that – you also erode your reputation, building an image of a black-hat brand.

Duplicate Leads

The act of reselling old leads is known as lead recycling or lead duplication.

There are two types of duplicate leads:

• Identical leads sold to different advertisers
• Slightly altered versions of a lead sold to the same advertiser

However, not every duplicate lead counts as fraud. For instance, a user may fill out a publisher’s form and later submit the same information directly on the website, generating two identical but valid records.

Deceptive Advertising

Publishers may artificially inflate their lead traffic through false and exaggerated claims in ads: promising a large discount, creating a false sense of urgency, or highlighting non-existent product benefits.

Users are drawn in by these exaggerated offers, only to realize later that the promises were false. As they don’t know the behind-the-scenes of affiliate marketing, they attribute the deception to your brand rather than the publisher, causing your reputation to take another hit.

How To Spot Lead Generation Fraud

No matter how well lead fraud is concealed, one of these three parameters always flags it:

• Mismatch between lead volume and conversion rates
• Sudden surge of traffic from a single partner
• Suspicious lead names, numbers, and other data

To track all three, you need a comprehensive lead management system, such as Phonexa’s LMS Sync. It works hand-in-hand with iClear, a built-in solution that effectively counters fraud, preserves data integrity, assesses risk, and protects your bottom line. By keeping track of leads, iClear helps businesses spot fraud early and protect both their data and results. This proactive approach reduces the number of fake transactions, lowers the risk of chargebacks, and makes sure brands spend time and money only on real, verified leads.

Here’s what LMS Sync offers on top of that:

• Lead analytics: Pull lead parameters into an intuitive panel to find ways to multiply your business revenue.
• Lead distribution: Automate your lead acquisition by telling publishers the exact lead parameters you need.
• Predictive modeling: Leverage your campaign data through predictive models to forecast your marketing results.

Book a demo to explore how Phonexa’s LMS Sync can help you streamline your lead management and effectively combat fraud.

How To Prevent Lead Generation Fraud

Partner With Reputable Publishers

You need a well-thought-out publisher validation algorithm to filter fraudsters out of your system: 

1. Form submission: Publishers submit a form, and you screen them to identify prospective partners.
2. Manual review: Assess the quality and relevance of the publisher’s website and its audience.
3. Technical assessment: Ensure that the publisher’s domain has existed for over a year and hasn’t been spotted in fraudulent activity.

Pro tip: Regularly check if your partners are not misleading or wrongfully incentivizing users to keep your hand on the pulse.

Validate Lead Data

Thanks to Phonexa’s iClear and partnering with Anura, fake leads can no longer infiltrate your system. The tool detects fraud indicators in their phone number details, IP addresses, ZIP codes, and other parameters.

iClear automatically declines suspicious and fake leads before they are processed, acting before your money is out.

Speaking of validation, you can also make use of iClaim by ValidRecord. It records every form interaction in real time, including user consent and source details, giving you proof that each lead is authentic and compliant.

Implement reCAPTCHA

As previously stated, bots evolve and adapt to CAPTCHA. You can get around that by employing reCAPTCHA, an upgraded bot filter that doesn’t give in to smart machines that easily.

Source: Scrapingapi

Unlike its predecessor, reCAPTCHA relies on behavioral analysis, assessing the time users spend on the page, how they approach solving challenges, etc. External behavior is also taken into account – if it’s human-like, the “I’m not a robot” checkbox substitutes photo puzzles.

Request Lead Verification

Lead verification is an effective way to halt the stream of stolen data leads. You can verify users through phone numbers or email addresses, which we think is best done in a live setting. As it filters out fraudulent and fake leads right away, it prevents them from cluttering up your database, making your lead management way easier.

Assess Lead Risks

IP intelligence, such as our IP Fraud Score tool, enables you to venture beyond the basics and score risks associated with your leads based on their backgrounds. Use our free IP Fraud Score tool for limited checks, and unlock full paid access through Phonexa or ValidRecord. 

With full access, you can instantly evaluate the reputation and historical behavior of each lead’s IP address. Elevated risk signals often indicate involvement in malicious activity, such as spam or bot traffic, allowing you to filter out fraudulent and fake leads before they advance in your sales system.

Detect Fraud & Manage Your Affiliate Campaigns With Phonexa

LMS Sync and iClear are a powerful duo, but they can do even more when combined with other Phonexa solutions. Their lead and call management capabilities, as well as actionable insights into your marketing, take your business to the next level and open new scaling opportunities.

Here are just some of Phonexa’s solutions:

• Call Logic: Track and analyze your inbound calls, adjust interactive voice response (IVR), and manage pay-per-call affiliate programs.
• HitMetrix: Record and analyze your website sessions to detect and eliminate friction points that cause frustration and repel users.
• Books360: Bookkeep all your affiliate cashflows, automate payments, and recap your finances within a neat dashboard.

Explore Phonexa’s software in detail in this short video:

Get Phonexa’s all-in-one performance marketing software suite at a single price:

Book a demo to learn more about Phonexa’s lead management software suite.

Frequently Asked Questions

What are the best practices of fraud detection in affiliate marketing?

The primary indicator of receiving fake leads is a mismatch between the volume of leads and their conversion rates. Rookie fraudsters may also give themselves away with traffic spikes and gibberish lead data.

How do I filter lead generation bots?

The primary tool to ensure your affiliate leads are humans is reCAPTCHA, a free Google service that assesses users’ behaviors to identify and block lead bots. You can also pair it with ad verification services that use machine learning to flag bot traffic.

What is a ping post, and how does it affect lead fraud?

Ping post is a lead distribution system that allows publishers to “ping” self-generated leads to advertisers. Before paying for ping post leads, advertisers receive enough information about sellers and leads to determine whether a lead is a duplicate or if it comes from a dubious source.