Earlier this year, we identified a spike in affiliate fraud. It happened right after the holidays as online purchases soared. Affiliate fraud refers to any false or suspicious activity to generate commissions from an affiliate marketing program. It’s an issue no one wants to ever have to deal with, but when it happens, it must be addressed quickly.
As a result of card brands' recent focus on tube sites, merchants that relied on tube advertising have gone back to affiliate marketing and consequently have seen a surge in new affiliate traffic.
We suggest regularly monitoring things like login rates, abnormal behaviors in transaction data, inconsistencies in affiliate geolocation, large average ticket prices via revenue share programs and unregistered URLs.
To help keep us all accountable, this month we break down the top five best practices to manage affiliate traffic.
GET THE 4-1-1
Back in the day we dialed 4-1-1 to get information and now is a great time to get dialed into our affiliates. Knowing Your Customer (KYC) is important. You need to have a consistent and organized on-boarding process.
This is one of the easiest and most effective methods for a merchant to prevent affiliate fraud. We encourage clients to “get to know” their affiliate marketers during their on-boarding process. This can be done by simply confirming banking information, receiving a physical signature on the marketing agreement and collecting a copy of the affiliate’s physical identification.
This small bit of due diligence can save merchants from having to pay large fees to acquirers and protect the integrity of their business.
FOLLOW THE FOOTSTEPS
Webmasters can make a big difference by tracking, verifying and monitoring all partners in their affiliate program. By looking beyond the conversion rates of marketing partners and deeper into trackable data, merchants can uncover warning signs of fraudulent activity.
We suggest regularly monitoring things like login rates, abnormal behaviors in transaction data, inconsistencies in affiliate geolocation, large average ticket prices via revenue share programs and unregistered URLs.
MINDFUL MONITORING
It is always a good idea to take a deeper look at traffic sources and content. You will want to monitor the sources for affiliate traffic as well as review the digital ads used to refer traffic to your site. The content of your affiliates must meet the card brand’s protection policies: MasterCard’s Business Risk Assessment and Mitigation (BRAM) Program and Visa’s Global brand Protection Program (GBPP).
If your affiliates are using brand-damaging content to direct traffic to your site, you will be held accountable for their content. You could face fines or worse, loss of service. Pay close attention if you are marketing via tubes or marketing a premium tube site. Tube traffic is usually user-generated and unmonitored, which can easily violate card brand policies. If the content on the tube site is not compliant and links to a premium program, the premium program is held accountable.
RED FLAG WARNINGS
Pay close attention to customer service issues. Things like increases in reported fraud by consumers or chargebacks should be considered red flags. These are clear identifiers for merchants that there might be fraudulent partners within their marketing network.
PAY YA LATER
Merchants should delay payments to marketing partners. This is helpful in preventing fraudulent affiliates from infiltrating a system for a few days, collecting the money, and jumping ship before activity can be detected. It is important for webmasters to remember that the more they know about affiliate marketers upfront, the lower the risk will be of introducing fraudulent affiliates into the system. We require that our merchants share their affiliate IDs, so we can freely help them identify current or new affiliates that have potential fraud risks.
Affiliate marketing is still an efficient way to do business and an easy way to increase sales, but taking the time to manage your affiliate marketing is critical. As I’ve said before, the best defense is a strong defense.
Cathy Beardsley is president and CEO of Segpay, a global leader in merchant services offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com.
