Will Fraud Kill Affiliate Marketing?

Chris Trayhorn
by Chris Trayhorn
May 26, 2010

Will fraud kill affiliate marketing?

It is up to you. You choose.

But here’s a clue: the BP oil spill probably just killed the Louisiana wetlands. I think we should take that as a warning of just what can happen.


The affiliate marketing industry is an ecosystem. It consists of a web of interdependent species: affiliates, merchants, networks, merchant processors, etc. Sometimes they compete, sometimes they are symbiotic. But they all rely on each other for survival.

As in Louisiana, it’s a nicely balanced ecosystem – but now disaster looms, threatening the survival of all.

In Louisiana the problem is an oil spill. In the affiliate marketing industry it’s a an unholy alliance of the FTC, the Russian mafia and the credit card companies. And while drawing a parallel between affiliate marketing and the Louisiana wetlands is an imaginary exercise, the issue of fraudulent activity is not.

If we don’t deal with it, it threatens our existence.

Here’s the point: we all need each other to survive. Merchants need good publishers. Publishers need good offers. Networks need both.

But we also need each other to behave. We all need to stick to the rules of the ecosystem.

There is temptation for all. Affiliates are tempted to try new traffic sources that may not convert well for the advertiser. Advertisers may push out creatives and disclosures that are incomplete or deceptive. And networks may choose to turn a blind eye so long as the conversions keep coming and advertiser cash keeps flowing through to wash away the dirt.

How do we change this dynamic? The only way has to be to recommit to a fraud-free environment. To recommit to the future of the industry. Which is our future.

Seriously, if you are tempted tomorrow, what will you do? Will you ignore the super-affiliate who sends you $50,000 of leads even though you’re not sure where they came from? Or will you syndicate an offer out to your network of publishers even though you don’t know if the advertiser can deliver?

It’s up to you. It’s up to all of us. We can stick to the rules of the ecosystem. We can play by the rules and prosper in the long-term. Or we can ignore advice and do our own thing until the drilling rig explodes and the crude oil washes over us.

It’s your choice. Just remember, the Louisiana wetlands aren’t coming back to life anytime soon.

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Chris Trayhorn

About Chris Trayhorn

Chris Trayhorn is the Founder & Editor of Revenue Performance magazine and the CEO of mThink LLC, a performance marketing services company based in San Francisco. Chris has worked on marketing campaigns with over 200 of the Forbes Global 2000. Friends say he knows a lot about a couple of things and a little bit about everything. He likes motorcycles, Manchester United and making pictures.

View all posts by Chris Trayhorn

22 Responses to “Will Fraud Kill Affiliate Marketing?”

  1. Henry Says:

    I agree with the above comment, the internet is with a doubt growing into the most important medium of communication across the globe and its due to sites like this that ideas are spreading so quickly. 

  2. wowkoo Says:

    Thank you for the extremely impressive article. It has great detail that are easy to understand and it also has great tips. I can’t wait to read more of your blogs. interesting to read this great article indeed because I have known many great and new things from you. Thanks a lot one more time.

  3. johnnysd5 Says:

    Thank you for this post. I too think that if the correct security systems are in place, you can really be guarded against a lot of this fraud. Recommitting to a fraud free environment sounds great, but just will not happen for a long time. Too many out there looking for a quick buck. It is very unfortunate. 

  4. JohnnyQuid Says:

    Well I’m not sure if they’re trying to "kill" affiliate marketing, but they are definitely trying to undermine it in some way or another. One example is the addition of the "Shopping" results. It’s really annoying to see it at the top of the search results. I bet you they did this because they saw too many amazon/ebay physical product review sites.

  5. francissteiskal Says:

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  6. Gunda Says:

    Fraudulent activities in affiliate marketing has increased with the increment in number of webmasters. It’s a kind of ecosystem too. None of the field can be untouchable with fraud. Each and every sector is victim of scam, spam or other types of fraud. Hence, instead of providing unbelievable offer to the publisher, we should provide little bit more secured affiliate method. Similar case can be applied for publishers too. As publisher, no one should be remarketing for any kind of offer provided for advertiser. Everytime, you are not supposed to make $5 per email submission or similar.

  7. dustinbuttry Says:

    @ all They do what they can to systematically improve the quality of their search results, both paid and organic. People relying on affiliate marketing will always be hit harder and harder by regulations, changes to quality score, etc. You really can’t blame them for not waning a search term to return 100 landing pages pushing the same affiliate product. That lowers consumer trust and Google is in the business of consumer trust. 

  8. maxbountysteve Says:

    To answer your question: No fraud will not kill affiliate marketing. I’ve been in this industry for 10+ years, the last 6 as a network owner. Throughout all these years, I’ve been hearing over and over the prediction that fraud will kill our industry. This hasn’t happened yet and I can’t see it ever happening in the future. Fraud kills the weak players. Those affiliates, merchants or networks who do not have the desire or abilty to play by the rules are the ones who suffer the most from fraud. Be it the affiliate who has their network account terminated for delivering sketchy leads (and there are many more methods than Russian mafia based stolen credit card rings), the deceptive merchant who deals with FTC investigations and/or lost credit card processing ability, or networks who become insolvent as they realize they aren’t being paid by merchants after they’ve paid their affiliates. The strong players have processes in place to detect and stop fraud as it’s happening and in some cases, prevent it from happening in the first place. These processes are constantly evolving and keep fraud down to a manageable level. I say a manageable level because fraud will never be eliminated. Fraud is based on greed, and that is certainly never going to go away.

  9. alishachin Says:

    According to my experience being a Manager of Digital Company I would like to assure that don’t worry fraud will not kill affiliate marketing.Because fraud all depends on person’s greed and it happpens when person is not satisfied with his earnings,so they can earn the money by any way and it happens with only weak players and strong players try to take down at some level.But it can never be eliminated completely. 

  10. Chris Trayhorn
    Chris Trayhorn Says:

    Durk, that’s a fair point and I probably overstated my case a little for dramatic effect. :-) But at the same time, it’s still the case that you don’t have to look far to find shady people advertising to buy affiliate accounts for the networks you mention. Perhaps those people are all caught before they do any harm, but clearly they still find it economically viable to buy the accounts. So something’s going on. But I’m open to be persuaded. Why don’t you write a piece for us?

  11. durkprice Says:

    Chris, When you broadly talk about "Fraud Killing Affiliate Marketing" you do a huge part of the affiliate industry a disservice. Our OPM practice works through Google, Commission Junction, Linkshare, ShareASale and many other affiliate networks. In over 10 years of working with these networks, fraud has never been an issue of any major consequence. These networks do an excellent job of policing their affiliates, affiliates are totally transparent to me the program manager allowing for easy negation of any fraud issues and merchants employ data capture techniques that preclude fraud to a great extent (credit card required, automatic call back on leads, and etc.). So, please specify more clearly the types of affiliate networks you are referring to and leave the one I have mentioned above out of the mix. I totally get what you are saying and it is clear a great readjustment in the market is coming.

  12. durkprice Says:

    Chris, I would love to write an article about fraud and fraud prevention in tier-one networks. I can get input from the networks as well as outline our own efforts at detection and prevention. What is the criteria and where would I send it once completed?

    I am also working on an article about why merchants should be in multiple affiliate networks- comparing the networks to television channels. Would that be of interest?

  13. rogerz matt Says:

    Some copy-protection technologies have borrowed from spyware. In 2005, Sony BMG Music Entertainment was found to be using rootkits in its XCP digital rights management technology Like spyware, not only was it difficult to detect and uninstall, it was so poorly written that most efforts to remove it could have rendered computers unable to function. Texas Attorney General Greg Abbott filed suit,and three separate class-action suits were filed.Sony BMG later provided a workaround on its website to help users remove it.

  14. jezwalker Says:

    It now seems the new plan is to pump in concrete and dirt. $50,000 of leads if you did not find out where they came from may turn out to be of the same value of the dirt BP will be using. What amazes me is that incoming leads are often left unchecked and left invalidated.

  15. MaymeLeaser Says:

    It wont kill affiliate marketing, but it’s going to have significant impact in the industry. Expect to see there being two camps of affiliate networks, one will be the scummy, get-rich, do anything crowd and the other will be the brand-centric group of performance advertising networks who refuse to work with FLOGS, Craiglist and Twitter Spammers. 

  16. nixer Says:

    Affiliate marketing is a marketing practice in which a business rewards one or more affiliates for each visitor or customer brought about by the affiliate’s own marketing efforts. Examples include rewards sites, where users are rewarded with cash or gifts, for the completion of an offer, and the referral of others to the site. The industry has four core players: the merchant (also known as ‘retailer’ or ‘brand’), the network, the publisher (also known as ‘the affiliate’), and the customer. The market has grown in complexity to warrant a secondary tier of players, including affiliate management agencies, super-affiliates and specialized third parties vendors.

  17. ruthsharonos Says:

    Now it is up to you how you are taking it as.Affiliate marketing overlaps with other Internet marketing methods to some degree, because affiliates often use regular advertising methods. Those methods include organic search engine optimization, paid search engine marketing, e-mail marketing, and in some sense display advertising. On the other hand, affiliates sometimes use less orthodox techniques.Affiliate marketing—using one website to drive traffic to another—is a form of online marketing, which is frequently overlooked by advertisers.
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  18. Chuck Hamrick Says:

    AM/OPM’s need to network together to out fraudsters. By sharing information on those we catch in our respective programs we can remove those that others catch. Also speak to your network to request more tools and specific reports to help police our programs. The majority of programs are on auto-pilot and affiliates just game the system. If the FTC cracks down we all have to find other careers. Don’t wait for the disaster to hit!

  19. devv Says:

    I get the ecosystem idea and I support it, my business is affiliated to a CPC network. It’s not very clear for me though where the initiative should start to stop the fraud in the system.

  20. danyelhector Says:

    I think its one of the recent topic that you had discussed above.According to my experience in Media and Digital field the frauds cannot kill the affiliate market if proper security systems are provided ti our company’s data.The organization must take all these points into consideration.Thanks a lot for sharing this topic here.  Regards, Denyel.

  21. rrgan12 Says:

    I truly liked your incredible content. Please keep up the good work. Thank you very much!
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  22. kristenmelroy Says:

    It is up to you. You choose.But here’s a clue: the BP oil spill probably just killed the Louisiana wetlands. I think we should take that as a warning of just what can happen.The affiliate marketing industry is an ecosystem. It consists of a web of interdependent species filiates, merchants, networks, merchant processors, etc. Sometimes they compete, sometimes they are symbiotic. But they all rely on each other for survival.As in Louisiana, it’s a nicely balanced ecosystem – but now disaster looms, threatening the survival of all.In Louisiana the problem is an oil spill. In the affiliate marketing industry it’s a an unholy alliance of the FTC, the Russian mafia and the credit card companies. And while drawing a parallel between affiliate marketing and the Louisiana wetlands is an imaginary exercise, the issue of fraudulent activity is not.