Building an affiliate marketing program is an excellent strategy to drive growth for your SaaS business. However, with financial incentives at play, it can trigger unwanted behavior like fraud. So, how do you manage and mitigate these risks? One crucial step is to learn how to detect affiliate fraud effectively.
Equally important is implementing robust affiliate fraud prevention measures to protect your program's integrity.
Here are some insights into questionable affiliate behavior and practical strategies to address them.
One of the most common fraudulent affiliate behaviors encountered is affiliates bidding on your brand terms in Google Ads. When this happens, their ads can appear above your list in search results. This can directly affect your brand visibility and divert organic traffic away from your site through their affiliate link—and you don’t want that.
To mitigate this, include a clause in your Terms and Conditions (T&C) prohibiting affiliates from bidding against your brand terms. Furthermore, you need to consistently monitor the referrals coming in from your affiliates, especially those from Google. Check if there are any ads running with your brand name and contain links from your affiliates.
This job can be demanding. Fortunately, there are numerous tools you can use to make it easier. Platforms like BrandVerity and The Search Monitor provide advanced ad monitoring services that help identify affiliates who violate your brand's paid search policies. Tools like these offer real-time alerts, allowing you to respond promptly to potential violations.
Stolen credit card fraud is another affiliate fraud issue to keep an eye on. This involves affiliates making purchases using stolen cards to validate them and earn commissions. Although this behavior is quite rare, it's something to be aware of.
Stripe Radar, a product offered by Stripe, can help detect affiliate fraud related to stolen credit cards and help you stay vigilant. If you want to monitor the purchases manually, look out for unusual behavior patterns, such as entering customer names with typos or making purchases from a different country than the one associated with the credit card location.
Self-referrals and leaking coupon codes are other common deceptive practices.
In a self-referral scheme, a customer signs up as an affiliate and uses their own affiliate link to purchase your product—essentially getting a discount. Furthermore, when you share coupon codes for tracking purposes, some affiliates may share them on coupon sites to increase their referral numbers.
To address these affiliate fraud issues, state explicitly in your Terms and Conditions (T&C) that these behaviors are prohibited. If you find an affiliate engaging in these behaviors, invalidate their referral and ban them if necessary.
Establishing straightforward guidelines like a detailed T&C document helps affiliates navigate their actions. They're not only aware of the expectations but also understand what actions would account for violations. Ensure each affiliate accepts the T&C when signing up for your affiliate program and has a copy.
Rewardful affiliate program software has recently released two robust updates to address self-referral fraud within your affiliate program:
Another negative behavior you should watch for is promoting your brand with objectionable content. Such placements can damage your brand integrity. Add a clause to your Terms and Conditions that explicitly forbids this affiliate fraud practice.
Another trick some affiliates use is setting their affiliate token to mimic a shared link parameter for other sites, such as Product Hunt. This practice can lead to leaking commissions to affiliates who game your program. To prevent this, review the performance of your affiliates and look for anything suspicious regularly, for example, sudden surges in conversions without corresponding engagements.
Now that you’ve known some common fraudulent practices in affiliate programs, follow the tips below to prevent them happening in your campaign.
Set Clear Rules
Draft a comprehensive Terms and Conditions outlining what is allowed and what isn't. We recommend covering the basics, namely the commission rates, payment schedules, confidentiality, brand use, and disqualifications.
Find out more about what to include in your T&C here.Â
Monitor Your ProgramÂ
Review your affiliate program performance regularly.
To detect affiliate fraud, look for suspicious behavior or red flags, such as high performance from new affiliates, sudden referral spikes, data mismatches, or unusual transaction patterns.
Implementing advanced analytics tools can significantly enhance your ability to detect affiliate fraud quickly and accurately.
Implement an Application Process
Screening potential affiliates through an application process allows more control over who can participate in your program. This way, you can handpick your affiliates after checking their profiles, audiences, common promotional tactics, etc.
Add Thresholds
Adding thresholds can help keep away people who want to cheat for quick money. You can implement a system where affiliates must first accumulate a certain amount before receiving their commission. The common threshold for a SaaS product is $50, but this should depend on your product pricing and plans.
That said, there's a downside to this approach. Setting a threshold could discourage honest members who genuinely want to contribute. They’re intimidated by the number, preventing them from joining your affiliate program.
Be aware of the various fraudulent behaviors of your affiliates. Effective affiliate fraud prevention starts with creating detailed Terms and Conditions that must be signed and shared during the signup process.
Monitoring your program regularly is also key to catching and addressing negative behavior promptly and efficiently. And when an affiliate violates the program rules, you should take action by suspending or deleting their account, or withholding their commissions.
