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Affiliate Fraud – Affiliate Marketing Scam

Affiliate fraud is time consuming, expensive and can seriously jeopardize an entire affiliate program’s business model. Affiliate Marketing is a great way for companies to broaden their reach on the internet but you need to be careful. The only way to fight affiliate fraud successfully is to meet the problem head on, with a comprehensive approach. The range of tricks goes from the traditionally unmistakable monkey business such as cookie stuffing, bogus leads, fraudulent credit card usage to the more creative and well executed cons such as posing as webmasters of high-profile websites and changing their name and address just before the affiliate checks are issued.

Affiliate Fraud - Affiliate Marketing Scam

Everyone has the potential to be a perpetrator:

  • Affiliates
  • Merchants & Networks
  • Buyers

Affiliates

Fraudulent activity by affiliates comes in both automated and non-automated varieties. Payment model for affiliates is pay per sale or pay per click. Pay per click fraud, where affiliates are paid per click for the amount of traffic they bring to the site, can be automated with scripts that are programmed to resemble the activity of real human visitors. These bots are referred to as “click bots” . Click Bots are one of the main sources of pay per click affiliate fraud.

A merchant needs to be aware that rogue affiliates may try to purchases something with a stolen or invalid credit card with no intention of receiving the actual product, but instead a commission for selling that product. Some of the troubles concerning affiliate fraud, can be prevented early in the process by screening your affiliate applications. When looking at a site for potential acceptance, you should be lenient but cautious. One of the mistakes that you do not want to make is to decline an application that could turn into a profitable relationship. However, some applications will come through with “free hosted” sites, or sites that are simply banner farms. Look around the site, check the “About Us” or “Contact Us” page, and look for any anomalies. Things to look out for:

  • You should have the ability to view the page where the banner/link was clicked. This will help you to understand the traffic coming from a specific affiliate.
  • Use caution when shipping internationally. You need to view the IP address of the buyer. You check this number with a service called Check IP (if by chance the address doesn’t work type “check ip” on google) and compare the location to the shipping address. If the IP address is located in France for example, but the shipping address is in Taiwan, extra caution should be used. Also look for signs of fraud such as: Larger than average order size, Express delivery requests.
  • Conversion percentages should not deviate too far from the average, either high or low. Too high of a conversion rate can indicate that the affiliate is either using incentives, or may simply be placing fraudulent orders. Too low a conversion rate, and it could indicate that an affiliate has placed your link or banner in a “banner farm”, or within a desktop application. A good conversion is about one to three sales per two hundred product views (clicks). Don’t confuse this with ad/banner impressions.
  • Unless you are an independent network, you never should offer pay per click payments to your affiliates. This model is way to risky to be carried out by one or few individuals. If you have a product and would like to have your own affiliate program without joining an established network, the only proper and most rewarding affiliate model is pay per sale.
  • Credit card fraud done by affiliates in an effort to earn commissions are usually easy to spot. There will be low numbers of orders and low numbers of clicks. Three clicks, one fraudulent sale is more likely to be an affiliate issue than 30,000 clicks, 500 valid sales, and two fraudulent sales.
  • The majority of your affiliate generated sales will come from an elite group making up a small percentage of your overall affiliate base. You should make it a habit to review and know who these affiliates are. Not only because this communication and knowledge will help you motivate your best affiliates, but because it will become easier to identify any bad ones. If a brand new affiliate is able to break into your Top 10 for the month, for example, you should check out the site and the orders that came through for any anomalies or patterns.
  • Are the affiliates producing too much traffic and no conversions? Watch out for the conversions that your affiliates produce. If there are conversions in non affiliate traffic and the affiliate is not able to produce a reasonable number of conversions despite off making you write an hefty cheque every month for the loads of affiliate traffic generated then it’s most probably an affiliate fraud case.
  • Watch out for difference in patterns in traffic without affiliate traffic and then match it with affiliate traffic and mark the unusual spikes in traffic
  • If you’re a network or a big merchant, use the phone! An affiliate manager should contact each and every one applicants via telephone, evaluate potential traffic, offer campaign suggestions and let them know about our special affiliate promotions available to them. This “Welcome Call”, when done properly is always received as positive and strengthens the relationship between affiliates and their affiliate manager.

If you receive an affiliate-generated sale which appears to be fraudulent, you should note that the affiliate that referred the sale may have had nothing to do with the fraud, so immediate accusations should be avoided. First step to take is to void the commission through your interface, so that it is not paid out to the affiliate. The next step would be to attempt to gauge if the fraud is a deliberate attempt by the affiliate to earn commission, or is simply an unrelated event as far as the affiliate goes. When it comes to the subject of fraud, subscribing to the belief that an ounce of prevention is worth a pound of cure will keep your affiliate program going in the right direction!

Merchants & Networks

Networks or merchants, if they have the sufficient privileges, can raise the percentage they take before paying you commission and report less leads/sales without you knowing it. Network and merchants do that because it was their intention all along or because they are in a distorted road, right before bankruptcy and trying to survive. Therefor if you are an affiliate it is essential that you choose a good and reputable network you want to advertise for.

List Of Reputable Affiliate Networks

Buyers

Some people will go as far as making purchases using stolen credit cards, fraudulent checks that will bounce, illegal paypal chargebacks or register using fake identification information. The purchases turn later in refunds and chargeback, but the merchants have already paid the affiliate commission. Usually of the transactions are screened by affiliate networks. They check the card numbers, IP’s and everything else that could indicate a fraudulent purchase. They have a huge database of fraud transactions that they built over the years, so this can be one reason more to choose an affiliate network such as Clickbank instead of using an affiliate script to manage your affiliate program on your own.

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16 Comments For This Post

  1. Anonymous Says:

    Hi

    I like your blog very much. First time i read it and looks, it have very good information about every aspects of internet marketing.

    Thanks. please keep good writing

  2. Troy Says:

    I am seriously considering affiliate marketing and enjoyed the blog. Can anyone reccommend a trustworthy site to a newbie trying to get involved?

    Thanks,
    Troy

  3. JohnS0N Says:

    Hey Troy,

    I would recommend wealthy affiliate to you. No matter what your level is you will surely learn something from the members there. The price is around $30 per month if I remember correctly.

    http://www.wealthyaffiliate.com/

  4. Jay aka kpfingaz Says:

    I’ve had trouble with an affiliate program that didn’t pay and didn’t answer any emails when I asked about my commissions. This was an independent program that also had a setup with Commission Junction.

    My advice is to always do research before joining any independent affiliate program before you promote them just the same way you would research a product before you buy and if they have the affiliate program on a network – promote them through the network instead of independently.

    In my case the fraudulent program was Viatalk…their sister site Hostrocket also has the same non responsive and non paying affiliate program.

  5. Randy Says:

    hey everyone just wanted everyone to know about the recent scam i had with exclusivecpa.com

  6. work Says:

    They are scams

  7. chris Says:

    Here’s another scam. An absolute fraud. In so many ways.

    Jeff Walker of Product Launch Formula fame uses other people’s expensive courses to make affiliate sales for himself using those very same expensive courses as “his” bonuses. (Let that sink in)

    Here’s how it works: (he’s done it twice in 10 days — I’ve saved his “bonus offer” emails if the moderator here needs to see them)
    Ok, here’s what he does:
    1) Someone announces a big product launch
    2) Of course, all the affiliate partners then try to get you to buy through their link
    3) Here’s Jeff’s filthy trick: Jeff sends an email to his list proclaiming how AWKWARD it is for him that this new launch is happening… because HE, TOO was just about to launch HIS OWN (very similar) COURSE. As I said, he’s done this twice in 10 days: He did this with Frank Kern’s List Control on March 15th and he did it today with Brendon Burchard’s “Become an Expert / Experts Academy” launch.

    4) So what Jeff does is say: (check out how SLEAZY this guy is) “if you buy through my link you’ll get 2 courses instead of one. But (and here’s the other part of the trick) “I won’t release my bonus training course until AFTER the training on the regular course is complete (“so as not to overwhelm you with too much content”, he says). Plus:
    5) Jeff says, “I’m going through Frank’s course (and exactly the same for Brendon’s course) and taking notes” so you’ll get those notes, too. (Meantime, he’s using Frank’s course to build his own course which is then the bonus). Same exact thing for Brendon’s course.
    Do you see how incredibly, infinitesimally small the chance is that Jeff Walker could have simultaneously developed SO MANY DIFFERENT courses — remember he’s also preparing for a launch of his own course — yet not released ANY of them only to have some of his affiliate partners beat him to the punch?
    Seems like STEALING in every way — from Frank Kern, from Brendon Burchard, and from the people who buy through his link who inadvertently pay for this thief to use their money to pay for his attendance at these real guru’s courses. Which he then pirates as his own course content as your bonus.
    WOW!
    By the way, as I said, I have the emails from this jerk if the moderator of THIS site wants to see this guy’s masterful chicanery in action before posting my comment.

  8. Sara Says:

    Actually, independent programs are the way to go. You can threaten the independent program by exposing their company if they don’t pay you. HOWEVER, STAY AWAY from AFFILIATE NETWORKS! These are teh real scammers because they are a 3rd party that regulates all of the commissions, stats, etc for affilaites. It doesn’t take much for the affiliate network to steal affilaite commissions and/or shave earnings. sometimes, or most of the time, the merchant does not know that their 3rd party affiliate network is stealing commission from their affiliates. Just look up; commission junction, shareasale, linkshare, etc and almost ALL of them have lawsuits against them for fraud. Independent affiliate programs is the way to go.

  9. sara Says:

    okay, but what about the fraud on the merchant’s end? Most, if not all affiliate networks (which act as a middle man) steal or shave some affiliates earnings. most affiliates claim that after investigation, they were only receiving credit for 1 out of 4 sales that they made. (Look up the Commission junction lawsuit). I have signed up with many affiliate networks, including linkshare and cj and have not made 1 sale, however, after using the EXACT same advertising approaches, but this time i advertised my own products such as e-books and writing servicse, I was averaging 1 to 2 sales. Something is fishy, i tell affiliates to create their own products and market them.

  10. ron vader Says:

    I need help to get paid from nitrotek uk affiliate program in macciesfield cheshire uk.I was their affilate for about two years then suddenly their banners were taken off my website with no explanation.i made two sales and i tried a number of times to contac them to pay me.To date they have refused to answer my request about paying me they money they owe me.Can you help me!Please email me.Yours Truly Ron Vader from canada.

  11. Mitch Mitchell Says:

    I’m missing something here, mainly how Brendon Burchard’s name shows up for this article on scams and yet his name isn’t mentioned anywhere in the article. In a way, his name’s being besmirched by being associated with the article because none of what the article talks about involves him in any way. The article on its own terms isn’t bad, but something just doesn’t seem right.

  12. ron Says:

    I had the same question as Mitch mitchell. What is the story on Brendon Burchard? Is he legitimate or not?
    Thanks in advance.

    Ron

    Mitch Mitchell Says:
    June 21st, 2011 at 6:27 pm
    I’m missing something here, mainly how Brendon Burchard’s name shows up for this article on scams and yet his name isn’t mentioned anywhere in the article. In a way, his name’s being besmirched by being associated with the article because none of what the article talks about involves him in any way. The article on its own terms isn’t bad, but something just doesn’t seem right.

  13. John L Russo Says:

    i DON’T SEE ANY problem with Brendon Burchard and I have bought his latest book and feel that he is honorable Ethical, and of high integrity. So whats this scam stuff all about I have yet to see any with him. Must be a personal vendetta with this sight??????

  14. seo essen Says:

    Same here…I wanted to check out Brendons cred and he comes up at #5 for the search scam. I don’t even know the guy but it feels wrong! :o (

  15. Jamie Cornell Says:

    The only issue I have with Brendon is he sells his latest book for free, but of course you pay shipping and handling. When you buy the book he offers, a $1000 dollar program for $197. It is a one click charge, so if you click it you buy it. It stores your credit card information for the 2nd purchase. I have contacted the Burchard a number of times with no response, and their phone number only allows for leaving messages.

    Brendon’s story, was good at first now he is shoving as much content as possible and using his relationship with Tony Robbins to the max.

    Even though he is giving his book away for free it will count towards New York Times Best Seller rank.
    Mike Dooley has a similar tactic at his live events, you $25 bucks to get in and you get a free book but he can count the give away for NY Times Best seller list ranking.

    This whole industry wreaks. Eban Pagan may be the worst of them all.

  16. Darin K. Says:

    I have to laugh at free when it includes shipping and “handling” sometimes. But the value of the books produced by Brendon Burchard are under-valued. These books are hard-bound copies with enough pages to be sold near $10.00…even if the pages were left blank (Have you ever bought a hardbound notebook from Staples lately?). A person should not believe everything they read, but, the quality of content is well supported with realistic scenarios and is thought provoking to say the least.

    Brendon’s coaching services and tours I wouldn’t pay for unless I have actually moved beyond the beginner’s stage on making a size-able income to afford them. I would say a genuine scam artist usually provokes a person to make a hurried decision on buying something and masking additional costs that come with “a limited time offer”. I haven’t seen anything of this sort come from this author yet.

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