Fraud In The Affiliate Marketing Business

Affiliate marketing is a great way for online business merchants to broaden their customer base over the internet, and is a very popular method of doing so. Since it is so common, discrepancies in the form of business fraud have come to the fore. Let us try to understand what type of fraud we should be aware of in this business, and a few simple ideas to prevent it.

The number one type of business fraud in affiliate marketing is credit card fraud. This happens when one or more rogue affiliates try to purchase your products with no intention of receiving the actual product but making a hefty commission using a stolen or invalid credit card.

The second common type of fraud in affiliate marketing is IP fraud. If the IP address of the user shows their location in America but the shipping address is of Europe or Africa, you must take extra caution. There is a very simple procedure for knowing the location of your shopper, such as the ARIN database.

The third common type of fraud prevalent across the world is click fraud. If an affiliate provides you with lots and lots of visits but hardly anybody orders, it is a scam. The affiliate has hosted your website address on a banner farm or included it in a desktop application. A low conversion rate is always indicative of this fact.

It is very easy to identify and stop all these kinds of business fraud in affiliate marketing. The first major thing is to pay close attention to your program. Know who your affiliates are and learn their ways of diverting traffic to you. Keep a check on how productive the relationship with your affiliate is to you. When looking for potential affiliates and checking sites, you must be lenient but cautious. You must be very careful while rejecting an affiliate because it may have been a profit generating relationship you may be forgoing. But make sure you look around the websites that are banner farms or are free hosted.

Make sure you check the 'Contact us' as well as the 'About us' page of the affiliates as well as their domain names. If the domain name is registered in a separate country to the account of the affiliate, red flag the associate. Once you start working, keep a track of which associate brings how much business and the conversion rates of the clicks they bring in. This will help you identify the good and bad associates. You may notice a sudden improvement or sudden fall in the performance; safeguard your interest by being extra cautious at that time. If you feel something is fishy with the sales shown by the affiliate do not hesitate to investigate.

Do not point fingers until you are sure that your affiliate was responsible in any way. Void the commission for the involved affiliate. Generally a fraud can be easily detected by the number of transactions. If 40 to 50% of all transactions are fraudulent, then your affiliate is definitely involved. If it is restricted to 1 or 2%, then it could be an unrelated event.