Talking about fraud in the affiliate marketing industry can be difficult. Transparency is always the best policy.
All industries have a past. Never in the history of commerce has there been a blemish-free business type. The world has seen a whole bunch of very serious mess-ups. Ranging from oil spills to E.coli outbreaks; from airbag malfunctions to data breeches, the list is long and scary. Each of these instances, while undeniably destructive and downright awful, provided a pivotal moment for the companies responsible. They could own up to their insanely obtuse oversight, or they could try and sweep it under the rug. Time has proven over and over again that open communication and truth-telling is not only the right thing to do, it’s better for business.
Affiliate marketing is no exception to such occurrences, and definitely no exception to the rules of transparency and commitment to improvement. For affiliate marketing, the elephant in the room is (and has always been) internet fraud. According to Lyz Nesvold, the Director of risk and fraud for ClickBank, it’s been a cat and mouse game from the start: “As fraud has become more and more complex, we’ve become more and more sophisticated at intercepting threats.”
With her team of five seasoned fraud protection experts, Nesvold works to manage and assess fraudulent behavior for ClickBank customers and users. They’ve handled everything on the fraud spectrum from “Prince of Nigeria” emails (remember those?) to the latest in highly complex identity theft. However, the three most commons risks the team sees fall somewhere in the middle of the threat spectrum. They are: friendly fraud, affiliate fraud, and CPA fraud.
- Friendly Fraud
Friendly fraud occurs when a customer is dissatisfied with their product and, instead of contacting the retailer, they call their bank and deny the charges. To offset friendly fraud, mitigation starts at the customer level. The number one way to these kind of fraud levels low is making sure the communication channel between all parties involved in the transaction are open, accessible, and easy to use.
- Affiliate Fraud
Affiliate fraud occurs when an affiliate attempts to submit a high volume of bad orders to get paid commission before they get caught. According to Nesvold, this kind of fraud has been on the decline: “We’re seeing less of affiliate fraud as it’s getting harder and harder for affiliates to push through the deterrent tunnels that we’ve put into place.”
- CPA Fraud
CPA (clicks per acquisition) fraud occurs when vendors work with a CPA company to source traffic. While this practice can be totally legit, Nesvold likens it to getting a tattoo… you get what you pay for. “The cheaper CPA companies tend to send bad traffic,” says Nesvold, “but vendors working with those kinds of companies aren’t on our network because we vet each and every vendor.” This vendor vetting process not only keeps bad apples out of the network and reduces fraud rate, but it ensures product compliance and quality.
A Proactive Approach
As for the future of fraud, Nesvold doesn’t think it will ever be eradicated in the affiliate marketing industry; it’s just a matter of staying ahead of the curve. She believes in a proactive approach: “We have portals we use to contact law enforcement… we have fraud conferences that our team attends… we stay educated so we know what’s coming around the bend. We work together with other players in the industry to understand the full picture.”
Though it may have earned itself a bad rap in the beginning, with the help of people like Nesvold and her team, the industry is now more trusted and more transparent than ever. “Affiliate marketing is much cleaner,” Nesvold says, “Thirteen years ago, when I started at ClickBank, it was the wild, wild west. Regulations were loose and there wasn’t the kind of fraud protection we see in the industry now. As the need for protection has grown, better products and technology have followed.”