Affiliate marketing is thriving and flourishing. In 2022, companies in the U.S. are projected to invest a staggering $8.2 billion in this field. However, despite its undeniable capacity for generating leads and boosting sales, it is crucial to stay vigilant against the abundance of affiliate marketing scams.
In 2020, fraudulent activities in affiliate advertising reached an alarming $65 billion, and experts predict that this number may exceed $100 billion by 2023. It is truly astonishing! If you are unaware of the indicators, individuals engaged in affiliate fraud could deceive you into losing significant amounts of money. This comprehensive guide presents the prevalent scams in affiliate marketing and highlights the red flags to ensure you do not become a victim of these costly deceitful techniques.
Why Are Affiliate Marketing Scams On The Rise
The rise in eCommerce activity can be attributed to the increased number of people going online, particularly due to the pandemic-induced global shift towards remote work. However, it is important to be aware that wherever significant online opportunities exist, there will always be individuals with malicious intent seeking to exploit them.
According to a study conducted by RAND, online shopping has increased for all age groups since the outbreak began. With more people purchasing items from multiple sources, the risk of fraud also rises. As this trend is expected to persist, retailers and advertisers should take the opportunity to familiarize themselves with the current landscape.
To unlock the vast potential of affiliate marketing, it’s crucial to understand the obstacles you may encounter. Familiarize yourself with these eight affiliate marketing scams to safeguard against fraudulent activities and stay vigilant for their presence.
1. Cookie Stuffing
Cookie stuffing is a fraudulent affiliate scheme where scammers compel a visitor’s computer to receive malicious tracking code from various affiliate networks. By doing so, if the visitor makes a purchase on a different retail site, the scammer can fraudulently lay claim to the commission from that sale.
This ad fraud, referred to as cookie dropping, allows the fake affiliate to wrongfully attribute sales, thereby receiving a portion of the sale even though they have not advertised the product or assisted in the transaction.
2. Click Spam
Click spam is a deceptive practice where cybercriminals employ malware to create the appearance of a person clicking on a PPC ad, despite no actual click occurring. If a purchase is made on the corresponding website, it is recorded as a referral for the affiliate partner. Detecting and preventing this fraudulent scheme poses significant challenges for both affiliate networks and advertisers.
Users are unknowingly and involuntarily directed by deceptive individuals to generate traffic, making the clicks appear to originate from mobile application users. Back in 2015, an individual known for perpetrating click fraud was found guilty and had supposedly accumulated $14 million through click spam. Vladimir Tsastin had successfully deceived over 4 million individuals across a ten-year timeframe by establishing a network of fraudulent publishing companies.
3. Fake Products
A fake product scam involves scammers creating advertisements or webpages for non-existent products or services. These fraudsters usually pose as reputable businesses, even going to the extent of counterfeiting the website and branding of legitimate companies, in order to earn the confidence of potential customers.
With numerous instances of scams on Facebook marketplace, social media has become a fertile ground for fake product advertisements, where scammers cleverly exploit the credibility of influencers and reputable websites to deceive individuals into buying counterfeit goods.
In the UK, an individual studying medicine and employed in the Forex sector caused investors to lose £3.8 million by enlisting them into a fraudulent investment network. Regardless of the type of deceptive product or service scheme you come across, the outcome typically remains constant—the swindler will disappear with the funds before you recognize it as a scam.
4. Transaction Fraud
Transaction fraud occurs when a perpetrator utilizes stolen credit cards or online accounts like PayPal to carry out a transaction through the account of an affiliate partner. This deceitful scheme not only affects advertising companies but also deprives legitimate affiliate partners of their rightful earnings.
To protect oneself from identity theft, consumers need to stay alert and proactively take measures as credit card details are often stolen and sold on the black market, making victims susceptible to this kind of fraud.
Transaction fraud poses multiple challenges for retailers. They not only incur commission costs by paying into the affiliate’s account, but also suffer product loss due to theft. Additionally, they face the risk of revenue loss as the affiliate will invariably demand a credit card chargeback once they uncover the identity fraud.
5. Spoof Traffic (aka bot traffic)
Spoof traffic refers to a type of online advertising fraud wherein scammers generate fake clicks and impressions on a website, giving the illusion of genuine referral traffic. This influx of fraudulent activity often involves the use of bot traffic and low-quality clicks from various countries.
Scammers employ data centers as link farms to cultivate counterfeit followers on social media, creating the illusion of being a trustworthy and valuable affiliate partner capable of assisting businesses in generating numerous new leads through affiliate marketing.
To a retailer, it may appear as if an affiliate is generating a significant amount of traffic to their site or service. However, in actuality, there are no legitimate customers involved. The fraudster deceives the system by utilizing bot-generated traffic, or they might even employ underpaid individuals to manually click on PPC campaigns.
Similar to call center fraud, this online fraud involves using an auto-dialer or making spam calls, but in the realm of the internet. These fraudulent activities are prevalent in PPC affiliate programs or those that compensate based on impressions. Unlike relying on completing a sale, scammers can profit by simply generating traffic.
6. Get-Rich-Quick Schemes
Scammers make use of misleading advertisements in this fraudulent scheme to persuade individuals that they can effortlessly earn substantial sums of money in a short period. Typically, this deceitful tactic appeals to aspiring affiliate marketers, potentially resulting in deceitful affiliate clicks or unauthorized access to sensitive information, ultimately benefiting the scammers.
7. Pay-to-Join Programs
Pay-to-Join is an affiliate scam often requiring payment via credit card or PayPal to enter an affiliate program. It is essential to be cautious of this fraudulent practice, as reputable affiliate marketing programs are typically free, in order to protect your sensitive information from online theft.
8. Google Ad Hijacking
Google ad hijacking involves scammers deceiving consumers by producing counterfeit ads that take precedence over authentic search results on Google. By exploiting branded keywords, these fraudsters can redirect your company’s paid ads and capture your genuine traffic when customers interact with the fraudulent affiliate links.
9. URL Hijacking
Fraudsters commonly engage in URL hijacking, an affiliate marketing scam, by creating websites or product names that closely resemble your brand’s.
As scammers clone your page content and redirect traffic, it is crucial for your company to understand the impact of this fraud on your SEO strategy. When visitors access the fraudulent website, they will be directed to the legitimate website while scammers earn commissions from an affiliate partner.
10. Fake Leads
Typically involving the creation of false leads, this scam involves sending them to an advertiser or retailer. Scammers typically utilize pilfered data when completing registration forms to lend an appearance of authenticity to these counterfeit leads, which the company will then compensate for.
To detect false leads, start by verifying if their contact details differ or are highly similar.
11. Click Spam
Click spam is a form of affiliate fraud wherein scammers employ mobile apps or websites to fabricate false clicks. These scammers often utilize malware to produce bot traffic, thereby creating the illusion of genuine mobile users clicking on PPC ads. Consequently, each action performed on the website will be registered as a referral. This deceitful scheme not only disrupts affiliate traffic data but also negatively impacts your business as it leads to inflated expenses for paid advertising.
How to Avoid Affiliate Marketing Scams as an Affiliate Marketer
After gaining knowledge about the most frequent fraudulent activities and their potential impact on your business, it is crucial for you to acquire the ability to identify reliable affiliate marketing programs. This step holds utmost significance as it aids in preventing any errors in affiliate marketing.
In order to steer clear of scams, let’s explore methods of distinguishing a legitimate affiliate program.
Review Affiliate Program’s Terms & Conditions
Before signing up for an affiliate marketing program, it is advisable to familiarize yourself with the company’s terms and conditions. A reputable brand will openly explain the inner workings of the affiliate program, the perks available for affiliate partners, the commission structure, and the payment process. It is important to remain cautious of exaggerated claims or incredibly high commission rates, as these could be red flags for potential affiliate scams.
Request Testimonials
You have the option to either ask for testimonials regarding the affiliate marketing program from the company or conduct a search on the internet for reviews.
Typically, on social media platforms, affiliate partners will often share their experiences with the program. Gathering testimonials from program users can provide insights into its advantages, disadvantages, and payment structure. Such information can assist you in determining if this program suits your needs.
Try Customer Support Services
If you are new to affiliate marketing, make sure to verify whether the retailers offer exceptional customer support. Locate their customer support email or phone number on their website and reach out to them. Assess their responsiveness and check if they offer assistance to aid in establishing your affiliate marketing business. A reputable company will prioritize the cultivation of its relationship with affiliate partners.
Check Company’s History
It is advised to conduct research on the company’s historical information available on their website, specifically focusing on their affiliate program’s progress in terms of revenue or number of affiliates during a specific time frame.
Additionally, you can seek out external sources such as news articles on the internet to acquire information about their historical performance in the affiliate marketing program. Furthermore, take into account the company’s longevity in the market.
Examine Search Results
When searching online, Google’s search engine results can indicate whether or not an affiliate program is authentic. By going through online reviews and complaints, you can identify both positive and negative experiences associated with affiliate programs. This approach will assist you in differentiating genuine affiliate programs.
Check If Anti-Fraud Policy Is Available
It is essential for trustworthy affiliate programs to prioritize fraud prevention. Determine whether the affiliate program you plan to join implements an anti-fraud policy or has a system for detecting fraudulent activities. In case there is no information available on the website, feel free to inquire about it from the company’s customer support team.
Look for Free Signups
Ensure you do not have to pay before enrolling in an affiliate marketing program, as the presence of paid signups may indicate fraudulent internet marketing practices, though the majority of affiliate programs do not charge any fees for joining.
