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Digital Identity, Security & Online Fraud

Affiliate fraud on the rise, caused by increased Cyber Monday sales

Wednesday 19 December 2018 | 09:59 AM CET

Adobe revealed that US consumers set new a new record on Cyber Monday 2018, which marked the nation’s largest-ever online shopping day at USD7.9 billion.

In 2016, affiliate marketing represented 16% of US ecommerce orders and at that rate, affiliates would have contributed nearly USD 1.3 billion of this year’s record-breaking Cyber Monday sales. Moreover, Forrester Research projected US affiliate marketing spend would increase at a 10% compound annual growth rate (CAGR) from 2015 to 2020, when it is expected to surpass USD 6.8 billion. Moreover, 81% of advertisers and 84% of publishers include affiliate marketing as part of their overall marketing mix.

Scammers use a variety of tactics to commit affiliate fraud, ranging from unethical to illegal. A few examples include:

  • Spam – Affiliates bombard consumers with unsolicited emails to generate clicks.

  • Typo-Squatting – Fraudsters buy domain names similar to a merchants’ own; if consumers mistype the URL, the affiliate’s site redirects and gets credit for a referral.

  • Cookie-Stuffing – These web cookies stay with consumers after leaving an affiliate site, so the affiliate gets future referral credits for unrelated visits to a merchant’s site.

  • Diversion and Site Cloning – Unethical affiliates may copy content or divert traffic from legitimate affiliates and merchants, stealing their leads and rightful income.

  • Bot Activity – Cybercriminals often use scripts or software to imitate consumers, automatically generating clicks or even orders to boost commissions.

  • Malware – Some fraudsters get visitors to download spyware or adware that injects affiliate code, while others use affiliate sites to steal consumers’ personal data.

  • Identity Theft – Criminals have been known to sign up as affiliates and place bogus orders using stolen credit card data. 

Chargebacks911, a dispute mitigation and loss prevention company, notes that affiliate-driven profitability is sparking interest among merchants and publishers alike, but may also draw more criminals to commit affiliate fraud unless the industry takes action. Eaton-Cardone, Chargebacks911’s founder, says that an estimated 2% of performance-driven transactions are likely cases of affiliate fraud.

To combat these tactics, Eaton-Cardone advises online merchants to develop and enforce an affiliate policy that outlines unacceptable practices and their penalties.

More: Link