Shoppers these days rely on recommendations more than ever, making affiliate marketing a powerful tool for ecommerce businesses to capture new shoppers and retain them as loyal customers.

However, a successful affiliate marketing program does have one often overlooked risk—affiliate fraud. Without the right measures in place, you’ll encounter fraudsters who exploit loopholes to earn commissions without generating sales. 

In this blog, we’ll help you understand how affiliate fraud occurs, common tactics that fraudsters use, and best practices to prevent it so that you can safeguard your affiliate marketing program and keep your brand’s growth on track. 

What is affiliate fraud?

Affiliate fraud is when individuals use deceptive tactics and exploit your affiliate marketing program to earn commissions. This can be caused by fraudulent affiliates who are a part of your program or by external scammers not within your affiliate network.

By generating fake traffic, fake clicks, installs, leads, and sales, these affiliate fraudsters disrupt your data, drain your marketing budget, and negatively impact the effectiveness of your affiliate program.

Common types of affiliate fraud

The kind of fraud risks that an affiliate program attracts depends on the incentive structure, affiliate approval process, tracking methods, etc. While the tactic that an affiliate or scammer uses to commit fraud may look different, it’s important to note that all types of affiliate fraud can have legal consequences.

Cookie stuffing

Cookie stuffing allows fraudulent affiliates to place hidden or disguised links on the website. These links may look like pop-up ads or hidden codes. When a shopper lands on the webpage, these cookies track their activity and attribute commissions to the fake affiliate marketer, even if they didn’t purchase through the affiliate's link. 

Another way they use this tactic is to embed cookies on the shopper's device after they've purchased through another affiliate's link, stealing commissions that the other affiliate earned.

Click fraud (last-click hijacking)

Affiliates generate clicks on their tracking links without actually intending to purchase. This way, they can inflate traffic patterns and numbers to gain commission. Some scammers use bots to stimulate these fraudulent clicks for larger payouts.

Fake leads or conversions

Another common scam is lead fraud where affiliates fake leads to earn commissions. They do this by using bots, stolen personal data, or information from individuals who aren’t actually interested in your products. 

They feed these as leads, getting paid for conversions that never actually happened. The brand ends up paying out the scammer for these fake leads without gaining any real customers.

Ad stacking

In this type of ad fraud, affiliates place multiple ads over one another in a single ad placement. So, a single action from a shopper ends up being counted as multiple clicks, earning the affiliate commission for multiple conversions.

Brand bidding

Affiliates bid on your branded keyword within search engines, diverting organic traffic to your business through their affiliate links. 

This manipulated attribution, allowing them to claim commissions for customers who were already looking for your brand. When these customers make a purchase, the affiliate partner takes credit, costing your brand unearned commission payouts and undermining your marketing efforts.

Commission theft

Commission theft is a way in which fraudulent affiliates manipulate tracking to steal commissions that another affiliate. They replace the affiliate's ID with their own or hijack the URL of a user’s browser session, taking credit for the sale instead.

Costs of affiliate fraud on your ecommerce business

Besides the direct financial impact it has, these fraudulent activities also cause hidden damage to your business. Here’s how affiliate fraud can harm your ecommerce store.

Lost revenue from invalid commissions

The biggest hit to your affiliate program is obvious. You lose out on revenue. These affiliate frauds are essentially stealing your profits. 

If you don't identify and manage this fraud, your business will continue to pay for fake activity out of pocket, causing a huge revenue leak. 

Incorrect attribution of affiliate sales

Affiliate fraud often distorts how affiliate sales are allocated. There are a few ways this may happen, such as:

• It takes the commission away from honest affiliates who put in the work and attributes it to fraudulent affiliates who found loopholes in your program.
• It uses tactics such as click fraud and fake leads to fabricate clicks and conversions that did not occur.
• It manipulates single sales to look like multiple ones to get larger commission payouts. 

Impact of fake referrals on customers 

Affiliate fraud doesn’t just impact the affiliates who actively promote your brand and refer new customers. It also affects the customers who purchase based on recommendations from these influencers and creators they trust. 

What if they find out the affiliates who referred them weren't paid their due commissions because a fraudulent affiliate stole them? This would automatically revoke the customer's trust in your brand, lowering brand loyalty and reducing returning shoppers. 

Distorted affiliate data 

Fake traffic and fraudulent conversions skew your data, making it difficult to analyze and evaluate your data accurately to understand how well your affiliate program is performing.

Relying on this inaccurate affiliate data, especially if you’re unaware of fraudulent affiliate activity, can lead you to make poor decisions, wrongly allocate resources, waste your marketing budget, and set up ineffective strategies.

Time required for fraud management

Managing affiliate fraud is a time-consuming process. Identifying, investigating, removing, and affiliate fraud prevention requires constant monitoring. This takes your attention away from other important tasks you need to prioritize to run and grow your ecommerce business. 

Want to maximize revenue for your affiliate marketing program? Our guide walks you through proven gamification tactics to increase engagement, incentivize affiliates better, and drive more sales.

How to detect and prevent affiliate fraud

Now that you’re aware of how fraudulent activity can occur within your affiliate program and affect your business, let’s look at some ways you can detect and prevent fraud effectively:

Fraud detection 

• Monitor traffic and conversion patterns: Look for irregular spikes in affiliate traffic, unusually high conversion rates, or repeated orders from the same IP address. These can indicate fake traffic, bot-driven click farms, or fraudulent purchases, requiring immediate action.
• Track click-to-conversion patterns: If an affiliate drives an unusually high number of conversions within seconds of clicks, it’s likely bot activity or fraudulent behavior. Implementing minimum time thresholds between clicks and conversions to filter out suspicious activity.

Fraud prevention 

• Verify affiliate identity before approval: Require affiliates to submit verifiable details—  like a website, social media presence, or tax information—before approval. Since fraudsters often use fake or disposable affiliate accounts, a thorough verification process ensures that you only attract quality and legitimate affiliate partners.
• Set clear affiliate program rules: Define guidelines on the validity of referrals and outline prohibited activities, such as self-referrals, fake transactions, and coupon stacking. These rules ensure that only honest affiliates apply to your program.
• Offer single-use coupon codes: Generic coupon codes commonly end up on discount-sharing websites or browser extensions, leading to lost revenue and false commissions. Safelinks by Social Snowball provides unique, single-use discount codes for each affiliate, helping you avoid affiliate fraud.

For example, Tumble, a home products brand, struggled with leaked discount codes and manual tracking of fraudulent activity. By switching to Social Snowball's Safelinks, they eliminated coupon fraud, reduced support team workload, and saw a 22.86x ROI on their efforts with a 4% increase in total revenue.

Want to avoid misuse of coupons on your affiliate program? Read our extensive guide for expert strategies on safeguarding your discount codes.

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• Limit cookie tracking for referrals: To prevent fraudsters from forcing tracking cookies onto users’ devices without their consent, you can choose to enable or disable tracking new affiliates using cookies. This helps you further eliminate fraudulent attributions.

Prevent affiliate marketing fraud with the right tool!

Affiliate fraud is an inevitable part of running an affiliate marketing program. But, with the right measures in place and regular monitoring, you can make sure that your affiliate program runs smoothly, stays fraud-free, and generates revenue for your online business. 

The right affiliate marketing app will guarantee that your program is fraud-free. Social Snowball lets you set up and streamline your affiliate marketing strategy within one platform. The app lets you customize the program to fit your brand’s needs, track referrals effectively, and, most importantly, keep your affiliate program safe from fraud.

Frequently asked questions 

How does affiliate fraud work?

Affiliate fraud occurs when an affiliate manipulates how affiliate tracking and commission allocation are managed. These fraudulent affiliates may do this in several ways— click fraud, cookie stuffing, fake leads, brand bidding, commission theft, or even ad stacking.

How does affiliate marketing fraud occur?

Affiliate marketing fraud can occur in different ways:

• They place hidden codes or pop-ups that shoppers click on and cause the shopper’s purchases to be credited to the affiliate. 
• Affiliates use bots or manually generate fake clicks to earn commissions. 
• They create fake leads and conversions using made-up contact information or through bots. 
• Affiliates could also place multiple tracking ads that count as multiple clicks for a single action that a shopper may take, which logs as multiple conversions. 
• Affiliate frauds use a competitor's trademarked brand name to drive traffic to an affiliate's website through ads. This is an illegal practice.
• Stealing commissions that another affiliate earned by replacing the affiliate's ID with their own or by URL hijacking a shopper’s browser session.

How to detect affiliate fraud in my program?

Look into your data to identify and manage affiliate fraud in your affiliate marketing program. Suspicious patterns, such as a high click-to-sale ratio, duplicate leads, and disproportionate sales attribution, are easy ways to pinpoint fraudulent affiliates within your system.

Most importantly, you need to take measures to avoid affiliate fraud within your program. Here are two ways to avoid fraud in your affiliate program:

• Make sure you have a thorough onboarding process that vets the affiliate joining your program.
• Affiliate fraud detection tools, such as Safelinks, allow you to set up secure, unique links that accurately track your affiliate referrals.

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