Exclusive Interview on Fraud in Affiliate Marketing with Mike Weiler

A month ago, the trial against Shawn Hogan took place, who allegedly defrauded various affiliate programs and even eBay over several years, earning nearly 28 million dollars in the process. Hogan was sentenced to 5 months in prison and fined 25,000 dollars.

This gives us a reason to take a look at this topic. What fraudulent schemes are common – and how do affiliate networks protect themselves against them? Mike Weiler, Head of Affiliate at Tradedoubler, answered our questions in an interview. [caption id="attachment_13694" align="aligncenter" width="593"]

Mike Weiler, Head of Affiliate at Tradedoubler[/caption]

1. What is the status in 2014? Are there more fraud cases or fewer than in previous years?

The affiliate channel has always had to deal with the issue of fraud, even today. We cannot determine that fraud in affiliate marketing has increased over the years up to 2014. Instead, we find that the methodology of fraud has become smarter and more sophisticated. This necessarily also means that the methodology of fraud protection has become smarter in the same measure. I believe I can speak on behalf of all major networks by saying that we have a good handle on the issue.

2. What types of fraud are most common?

• Cookie Dropping

• Brand Hijacking

• Typosquatting

• Fraud with fake customer data

• Fraud through adware and software

If I had to rank the fraud methods you mentioned, the following picture emerges:

1. Brand Hijacking (in the sense of Ad Hijacking)

2. Cookie Dropping

3. Fake customer data

4. Typosquatting (in the sense of typo domains)

5. Adware / Software

However, I would also like to point out here that there are certainly clients who deliberately and strategically use this type of fraud to suit their needs, for example, the depiction of search with official brand approval in closed affiliate groups. So, it's not always exclusively fraud. I would prefer to define fraud as such activities being secret, i.e., without the knowledge and consultation with the agency/network or advertiser.

Moreover, most of the points listed are sometimes so complex to implement that they almost do not weigh heavily anymore.

3. What preventive measures are taken against such fraudulent cases?

There are, of course, as mentioned above, various levels of prevention.

a. First of all, sites must be automatically verified at registration in the network through our Site Verification. A code must be embedded that proves access to the domain.

b. KPI Screening: Suspicious values or changes in KPIs are closely examined

c. Suspicious affiliates who suddenly start generating significant revenue on programs are investigated by the Network Quality Team, and if necessary, contacted to explain the traffic.

d. Our account managers know their accounts and immediately see when new publishers become active, the same should apply equally to agencies

e. Check at the time of payout: Changes in bank accounts or affiliates being paid for the first time are specifically checked (referral check, etc.)

In addition, we use network-wide and risk-based tools to achieve automated monitoring. If we identify a publisher as a fraudster, the procedure is documented, and depending on the situation, the publisher is contacted, issued a warning, or the account is immediately blocked, and the balance is transferred back to the advertiser's account. In case of doubt, the publisher must prove that traffic and sales are legitimate and that our terms and conditions and program policies have not been violated. Being a strong international network, we also regularly coordinate with colleagues to identify corresponding trends earlier. Warnings and exclusions naturally apply across countries as well.

Also, in the screening process, it's often important on the side of customers and agencies to thoroughly examine the affiliates. Additionally, proactive, vigilant account management by the agency or network already alleviates most problems. If I know my affiliates, fraud is also minimized. Finally, advertisers and agencies also have the first valuable transparency over the sales validation through careful chargeback management to largely uncover fraud.

4. What are the general measures in case of suspected fraud?

If the fraud is confirmed, the affiliate is excluded across the entire network, and internationally as well. In case of suspected fraud, as mentioned above, the traffic must be disclosed. Possibly, the fraud must be uncovered together using brand watch tools, etc. Here, the network with the referrers, the search agency, or the client with Brandwatch etc. are required to contribute the results that help in uncovering. If all parties pull together, no fraud can occur on a program.

Are you interested in the topic "Fraud in Affiliate Marketing" and have more questions? Mike Weiler will be available on June 24th and 25th, 2014, at the Performance Marketing Insights in Berlin to answer your questions.