Affiliate Fraud: 6 Common Methods and Best Practices in 2023

Affiliate marketing is an excellent way to attract customers and increase revenue. However, cyberattacks such as affiliate program fraud pose a threat to companies operating in online sectors like travel, retail, and finance. In 2023, marketers lost about 140 billion rubles due to affiliate program fraud. Companies that earn revenue from affiliate links must protect their websites from fraudsters to avoid wasting their advertising budget.

In this article, we will discuss what affiliate link fraud is, the 6 most common methods of affiliate link fraud, and the 3 best practices for preventing affiliate link fraud.

What Is Affiliate Fraud?

Affiliate fraud is a type of advertising fraud that refers to any deceptive attempt to earn unearned commissions from an affiliate marketing program.

6 Most Common Methods of Affiliate Fraud
1. Click Fraud

Click fraud occurs in pay-per-click (PPC) online advertising. Websites that display ads receive compensation based on the number of clicks on the ad. Click fraud is the use of a bot or a human to generate fake traffic on websites to earn unearned revenue. 

Click fraud can be carried out by low-paid workers or bots. A person or bot repeatedly clicks on an ad to generate massive traffic. Bot traffic can be easily identified by tracking visitor actions and behavior across web pages. Some signs that can help you detect click fraud include: 

• High number of clicks,
• Low conversion rate,
• Abnormal click-to-install time (CTIT).

However, fraudsters are likely aware of web tracking technologies and use VPNs or constantly route their IP addresses to avoid revealing their identity.

2. Cookie Stuffing 

Cookie stuffing, also known as cookie dropping, is an illegal affiliate marketing technique where websites gain access to a user's browser information by dropping invisible cookies into the browser without their permission. Common methods of dropping cookies include pop-ups, JavaScript, browser extensions, images, and stylesheet plugins. 

Affiliate websites pay affiliates commissions for introducing and directing visitors to their site via a link or ad. Unscrupulous affiliates use cookie stuffing techniques to make the site believe they referred users to the target affiliate site in order to earn unearned rewards. For example, when a user visits a site, fraudsters without their knowledge drop malicious cookies from an unrelated site into their browser to steal commissions.

3. Typosquatting

Typosquatting, also known as URL hijacking or fake URL, occurs when a user accidentally types an incorrect website address into the browser's address bar. If the misspelled domain is purchased by typosquatters, the user is directed to a malicious site. Typosquatters calculate the most likely typos and misspellings in domains of popular sites and acquire such domains for various reasons, such as selling the domain back to the legitimate site owner, damaging the brand's reputation, or earning commissions on the legitimate site's affiliate program.

4. Chargeback Fraud

Chargeback fraud is the reversal of money from a cardholder's bank account after receiving purchased goods or services. Consumers may request a chargeback for various reasons, including card fraud, defective/damaged goods, unauthorized payments, etc. Chargeback fraud is mainly carried out in three different ways: 

• Friendly fraud occurs when a customer makes an honest mistake - for example, a family member makes a purchase using a shared card without the cardholder's knowledge.
• Criminal fraud occurs when an unauthorized person purchases goods and services using stolen credit card numbers without the cardholder's permission.
• Merchant error refers to any problem caused by the merchant, such as delivering the wrong item or incorrect billing description. 

5. Malicious Adware

Malicious adware is a combination of advertising and software. Websites place malicious adware on visitors' devices without their permission. Affiliates use malicious adware to display ads on users' devices and redirect them to the advertised site via a specific link while browsing. A program or app you intend to install on your device may contain hidden malicious adware; when installing software, ensure the web source is trustworthy.

6. SDK Spoofing

Software Development Kit (SDK) spoofing is a method used by fraudsters to create fake installs that look legitimate in order to earn commissions. Fraudsters use user activity tracking techniques and collect data from real devices to generate fake ad clicks and traffic.

3 Ways to Prevent Affiliate Fraud
1. Proxies: Ensure Ads Appear in the Right Location

As an affiliate marketer, you need to ensure that the ad is displayed on a safe platform, has human traffic, and is seen by the desired audience. You can use proxies to test localized affiliate content in multiple locations. Residential proxies are the best option for bypassing geo-blocking and checking that ads are not shown in undesirable locations. Unlike datacenter proxies, residential proxies assign users real IP addresses provided by ISPs (Internet Service Providers).

2. Browser Fingerprinting: Identify Website Visitors

Browser fingerprinting allows website owners to track users' online actions and behavior. It helps identify traffic from non-human sources, such as bots, based on visitor characteristics like session duration, request frequency, repeated page views from the same IP address, etc.

Websites can collect information about their visitors' devices using browser fingerprinting technology, including time zone, preferred language, browser type, installed plugins, and user agent. Data obtained from the user's device can be used to detect and block any suspicious user activity to protect site content from any fraudulent actions.

3. Tracking Affiliate Links 

Websites can detect fraudulent activity by regularly monitoring affiliate link traffic. You can automatically track clicks on affiliate links on your sites using analytics tools like Google Analytics or Google Tag Manager. When a specific event occurs on an affiliate link, the analytics tools track and record it. For example, when someone clicks an affiliate link, you can see how many times affiliate links were clicked on a particular web page. If an unrealistic number of clicks is attributed to a single IP address, a suspicious transaction can be flagged based on regular analytics data.