Affiliate Fraud Statistics & Financial ImpactA Throbbing Headache For Merchants
Stats & Other Key Data Illustrating the Threat Posed by Affiliate Fraud
It’s easy to write off fake clicks as a minor cost of doing business. But these costs add up.
Today, affiliate fraud has become a multi-billion dollar headache for the eCommerce industry. And for individual merchants like yourself, affiliate fraud can erode your competitive advantage, result in higher operating costs, or even compromise your data. In this article, we’ll examine this growing threat and explore how it can affect your business.
Affiliate Fraud
In this guide, we’ll take a closer look at affiliate fraud. We’ll examine common tactics used by fraudsters, talk about how it harms merchants, and explore how you can protect yourself from this type of scam.
Affiliate Fraud: By the Numbers
According to data from consumer research firm Statista, digital advertisers invested over $602 billion in 2023. This means that any scams targeting affiliate marketing could be very big business.
Industry experts report that these scams are on the same level as identity theft and friendly fraud in terms of potential financial impact.
of online traffic is driven by affiliate fraud
Source: Cheq
disappears annually due to affiliate fraud
Source: Cheq
of all affiliate marketing losses are tied to fraud
Source: mFilterIt
How Affiliate Fraud Impacts Businesses
So, just how bad is affiliate fraud for your business? Unfortunately, the harmful effects of affiliate fraud extend beyond the immediate consequence of paying out an unearned commission. Affiliate scams can impact your business on multiple levels:
You need to invest in robust fraud detection and prevention measures to stop affiliate fraud in its tracks. You must also continuously monitor your affiliate programs to ensure they maintain their effectiveness and credibility.
At the moment, the biggest challenge in fraud mitigation is ad placement fraud. First, ads aren’t seen because they're in that 1x1 iframe that's virtually invisible to the user. Second, the publisher can render one ad viewable but create a script where multiple, invisible-to-the-eye ads are triggered simultaneously. It’s challenging to identify fraud. Because iframe technology doesn’t easily allow for traffic source identification, it’s difficult to trace.
Honestly, sometimes the biggest challenge of mitigating affiliate fraud is proving it. There are several factors that will raise a red flag: short call durations is an obvious one. Affiliates who convert much higher than others with the same offers are another. Seeing the same caller IDs appearing in several different offers from the same affiliate is a clear eye-brow raiser! Once you recognize suspicious trends, having 2-3 team members dedicated to compliance and listening to calls all day usually finds fraud quickly.
I feel like the biggest challenge is the adaptation of new technologies. It's gotten to the point where each time I see a new functionality announced, my first thought is, ‘How can this be twisted by a fraudster to scam a merchant?’
