Fighting Affiliate Fraud - Put Your Detective Hat On

[Linda Buquet]

Many merchants and new affiliate networks ask me about how to screen for affiliate fraud or verify new affiliates. Here's a good general article I just found that can be used as a basic guide. This would be especially helpful as an overview for new affiliate managers.

<blockquote><a href="http://www.bustathief.com/2008/02/affiliate-fraud-affiliate-marketing.html">Affiliate Fraud - Affiliate Marketing Scam</a> - "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 forced clicks, 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."</blockquote>

 

[experienceadvertising]

There are large numbers of "affiliates" that would seek to place fraudulent leads and/or sales on merchants sites. They are preying on the companies that don't screen their sales/leads well. You have to have a very vigilant fraud detection process in place to make sure you don't end up paying out affiliate on bogus sales. This can be acheived by assigning a customer service rep to phone verifying all you sales and leads as they come into the website.

 

[lacie]

I have a friend that does phone verification as well and it seems as a good choice. I have also gone to some websites for aff help and told by their "support chat" they are fully legit, log off and go search. Within minutes you can find some of these faulty people out, its really sick to think how bad they prey on some new people (like me, almost fell for two of them, almost).

 

[Julia15]

In my experience, the best way to limit or fight affiliate fraud is to be preventative.

This means taking lots of time and consideration when processing affiilate applications, and only approving those into the program that you are sure are legitmate - (this doesn't mean that they have to be top quality or high performers by any means). Ask as many questions as possible until you get the answer that you need, in terms of how and where they will be promoting your product, and what methods they will be using to drive traffic. Most importantly, make sure that their details are legitimate. The most common case of fraudulent applications that we see are when affiliates try to claim another site as their own - a quick phone call to the website in question can clear this up very quickly.

It may be time consuming, but I find in the long run it is better to be proactive than reactive.

It's also wise to keep a very close eye on new affiliates in your program especially when they first start sending traffic and have not yet established a solid relationship with you. This way you can nip any fraud in the bud, if necessary.

Cheers,

 

[experienceadvertising]

I agree...a thorough approval, including a phone call, is key. Unless you manage CJ or Linkshare and then you have to take your chances the affiliate you are approving are legit.

 

[Rob_TID]

My message to affiliate managers is be careful when you reject affiliates.

I make a point of NEVER working again with ANY network that rejects me. And I do this full time and my earnings are only going up so it's really their loss.

The reason I get ****ed, is because stopping 99% of affiliate fraud can be done on a standard fraud risk points system (which my application should NEVER set off). If people reject me, it means that they are either idiots or lazy - in both cases not the type of people I would want to start a long term business relationship with.

Common indicators for affiliate fraud at the application stage are:

free email address
free website
high fraud risk countries (africa, turkey, phils and china and eastern europe being the main ones)
no phone number
fake phone numer
home address that appears on internet (use google)
application from public proxy server

There are a bunch of others, but if a new affiliate matches a COUPLE of these then you usually need to start worrying.

At the sale/lead stage, a lot of fraudulant affiliates try to hussle you into paying out quickly (so you don't have time to check everything) either by email or by phone. Don't be bullied.

The most successful affiliate fraud involves stolen credit cards - I won't explain the process on a public forum but my message to merchants is don't be lazy when checking your sales and affiliate stats.

 

[Linda Buquet]

Good point Rob. If I remember right you were an affiliate manager too right?
So you know the game from the AM side as well, right?

 

[Rob_TID]

Yeah, I was Linda, but I like being an affiliate HEAPS more!

 

[Linda Buquet]

You free spirit, you!

 

[wisejoker]

Well, make sure that your affliate network allows you to reverse any fradulent transactions within an acceptable time period. If it takes you 30 days or less to verify a lead/sale, then set 30 days.

The danger is when your program is in an affiliate network that insist that affiliates be paid quickly and doesn't factor in that sometimes merchants need time to verify credit card transactions or what not.

With this, I think that it'll be quite safe for the merchant?

 

[Mushroom]

Fighting Affiliate Fraud ---> Julie

Julie,

I really echo your comments in regards to the importance of..

QUOTE]The most common case of fraudulent applications that we see are when affiliates try to claim another site as their own - a quick phone call to the website in question can clear this up very quickly.[/QUOTE]

A few of my sites have been abused this way, and the offenders, in my case were offshore. China to be specfic.

The method they used was to make application through a affiliate network and use the information about my site they obtained through a "Who is" lookup of the domain name. The section they filled out for sending the check was also mine, this all make it looks legimate to the affilate manager. They would let this sit for a few months after getting approval from different affilate managers within the affilate network. Then, say within a few months, they would change the address of where the check were to be mailed. The change of address would go undetected by the affiliate managers. They would then enter into boogus sites (charge stolen credit cards for merchant purchases), SPAM mail.

You may ask what about the email address of the domain, which is often used to varify the domain. They would use a name that we would not recognize on our end and it would just appear as SPAM, and be ignored. Like SPOOF.

Julie the best way to fight this problem is through awareness. I tired to go through the affiliate network and they would only say it was the affiliate managers responsibility to verify, not the network. Agencies like the Federal Trade, Attorney General's Office, FBI are helpless to deal with these matters from offshore.

Kind Regards

 

[Rob_TID]

Yup, saw that happen a few times.

The way to overcome that is to check the geographical IP of the application at the beginning.

If Fred Smith from Iowa is applying from Xinjiang, it was usually safe to delete his application straight away.

 

[Linda Buquet]

Yep there's a huge very organized Chinese fraud ring, they stole my identity too.
Applied to TONs of networks and programs pretending to be me. Same MO as Mushroom said. Luckily some networks that do phone verification called to see if I was really me so I was able to figure it out. But could not stop it. Some merchants that don't know me thought I was the one doing the actual fraud. It was a mess for months.

In my case even when they changed the pay to address it was not even obvious because they were so smart they had PO boxes that sounded like real addresses all over the country. They set one up right in OC where I lived, so it would not raise much suspicion with AM's, they'd think I just moved down the street. I got that local mail house to collect and keep all their mail for a month and send me copies of all the envelopes. Those guys had TONS of checks from tons of networks made out to a bunch of different peoples names. TONS! We tried to get the FBI involved. I could not even get to anyone that knew enough about the Internet to understand the situation and how big this was. That was only one mail house. They had mail houses all over the country forwarding checks to them in China.

What I don't get though is how they could cash all those US checks in a Chinese bank, made out to a bunch of US names and some even made out to US company names?

 

[Linda Buquet]

Oh and they did it to Shawn Collins and other big names I know too.

I think networks should set up a flag for change of address and call to verify when it happens. Legitimate people don't move all that often that it would put that much strain on the staff. They could probably save a ton of money by catching these guys before they start sending out checks.

 

[Edwin]

What I don't get though is how they could cash all those US checks in a Chinese bank, made out to a bunch of US names and some even made out to US company names?

Maybe they started their own bank
With the huge amount of checks you saw that where coming in they may have created a financial network of their own or use a insider at the bank to cash the checks? either willingly or forced?

 

[Mushroom]

Linda,

They had a US Bank that the funds would be sent to.

Ideas, like the ones expressed here, are good ways to help, and they need to be used by the Merchants because the Affiliate Networks I spoke with said it was the merchants responsibility not the network.

I felt if the Network would do a little screening on the front end as an application is submitted it would stop the majority of problems. The Network said it would be to be of a burden, and resource drain.

I don't agree and fought it pretty hard with the Networks.. for my effort I got a letter from their General Counsel telling me to let it go,. or they would sue me.

I spoke to their attornies and told them what I thought of them suing me for trying to stop China from frauding the publishers, and merchants. Nuff said.

The answer is be aware.

 

[Linda Buquet]

Whoa threatened to sue you for trying to get them to do the right thing?
That's harsh!

Well I know for a fact the guys that stole my identity - the checks were all sent to them in China. But you're saying they turned around and deposited them to a bank in US? How? They would have to have a fake ID and bank account set up under Linda Buquet, Shawn Collins, ABC company, XYZ company etc. Well however you cut it, was pretty elaborate scheme and I guess I don't even want to know how they did it and we shouldn't discuss details here in case it gives some scammer that could be lurking ideas.

 

[Rob_TID]

Defending against fraud in your program is not necessarily about making your program airtight. It is about making it a more difficult proposition for fraudsters than the next affiliate program.

 

[Mushroom]

Affilate Network Fraud

We can expect fraud from Countries like China when they know there is no recourse for their action. So what we must do is use some common sense and do some very simple due diligence. Some affiliate networks (or the ones I have dealt with) do not even call the publisher making application to verify information.

Why? is a question I have asked many times, and the only conclusion I have is that it requires resource time on their part. Plus the same for China there is no recourse to the Network for using a Publisher's information even if the person submitting it is doing so fradulently.

I really feel Affiliate Networks will become a thing of the past like Banner Networks and disappear.

Again the Answer is Awareness

 

[Julia15]

This has been a useful thread, and the feedback is great.

I think this is a case where you have to choose carefully which networks you partner with. Both networks and the merchants that they work with have a shared responsibility to screen affiliates carefully, but basically the task comes down to the individual who is managing each specific affiliate program (in my opinion). Occasionally inexperienced merchants join a network and set up an affiliate program expecting the process to be quick and easy without realizing (or wanting to do) all the important administrative work that goes along with it. Like Mushroom said - it's a matter of not dedicating the necessary resources.

That being said, not all networks operate on this model, and I think those that implement the proper anti-fraud procedures will continue to grow sucessfully.