If you read some of the latest data surrounding the extent of affiliate fraud, you might have questions. In 2020, nearly 10% of traffic coming from affiliate marketing programs was fake. Now, in 2022, that number has almost doubled (17%), which means the affiliate industry is expected to lose over $3.4 billion in fraud this year. 

How can this be? What’s going on? As someone who has run a $200 million/year affiliate network, and owned one of the first CPA networks in the world in 2000, I have some significant insight into what is going on.

The simple answer is that affiliate fraud has become more sophisticated and harder to detect. Bad actors are using increasingly sophisticated bots to generate fake traffic, and they’re becoming very good at it. In fact, they’re so good that even some of the largest affiliate networks have been duped.

So what can be done? The affiliate industry needs to get better at identifying and filtering out bad traffic. But that’s easier said than done. In the meantime, if you’re an affiliate marketer, it’s important to be aware of the risk of fraud and take steps to protect yourself. Research from CHEQ, a cybersecurity firm, revealed a wide array of bots and human-malicious traffic being driven by affiliate partners, including botnets, click farms and automation tools.

Guy Tytunovich, Founder and CEO of CHEQ says,”Affiliate marketing has unfortunately become synonymous with fraud and fake traffic… It’s no longer a question of ‘do I have fraud’, it’s only a question of how much.”

Who should you be worried about? Here’s a huge hint, stop working with people that the FTC has gone after. They have proven themselves to be fraudsters, they have proven themselves to be scammers. Make sure if you’re in the industry, these companies are on block lists, and that you’ll never work with them.

Two folks even sued by the FTC have even received “awards” from Affiliate Summit for their “contributions.”  I want you to think about this: someone so fraudulent that the FTC sued them for millions of dollars, received an award for “contributions” to the affiliate industry.

This means that the industry celebrates frauds, celebrates scams and honors the people the rest of the industry would never normally do business with. However, if you’re involved in affiliate marketing, someone is brokering your offer, your product to someone who is scamming someone.

The FTC proved it.

This is guaranteed, because the industry is accepting of frauds and promotes them because they pay the bills.

Because that’s their business model. Period. They depend on the 20% or so of fraud to be competitive, and to make money.

That’s why there are only a few companies I recommend that anyone work with: those with an established company, have never been targets of the FTC and have taken proactive action to prevent fraud by not allowing “brokers” to take it to scam networks.

  While this is a staggering number, it’s not surprising when you consider how affiliate marketing works.

Essentially, affiliates are rewarded for driving traffic to a merchant’s site, and as the industry has grown, so too has the amount of fraud.

Unfortunately, this means that merchants are losing out on billions of dollars in potential sales each year.

What can be done to combat this problem? 

There are a few things that need to happen in order to reduce the amount of affiliate fraud.

 Affiliates need to be better educated about what constitutes fraudulent activity and how they can protect themselves from being scammed. 

Merchants also need to invest in better technologies that can help them detect fake traffic and identify malicious actors.

Analytics is the only way to go here, most fraud solutions for “affiliate marketing” are nothing but frauds.  I mean this, there are very few companies with a proven fraud detection system that works. I’ve asked almost every single company to PROVE they are what they claim, and only a few have ever shown me the inner workings — and the data shows over and over again they barely work ever.

Finally, networks need to stop brokering to third party networks. This is common except for a few notable companies. Feel free to contact me if you want to work with them.

Pesach Lattin

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