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Thread: What is your average fraud ratio?

 
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  #1  
Old February 28th, 2010, 09:53 PM
Affiliate Manager
Join Date: January 5th, 2010
Posts: 38
What is your average fraud ratio?

.... and I mean each kind:
- consumer fraud
- affiliate fraud

What do you do to reduce consumer fraud? Have you encountered the situation when you still have to pay commissions to affiliates for false transactions? (Clickbooth's agreement simply states that it's merchant's liability. Hah?)
  #2  
Old February 28th, 2010, 10:06 PM
Affiliate Manager
Join Date: February 10th, 2010
Location: On a Lake in the Middle of No Place
Posts: 79
We have never had a to deal with fraud. 0%
  #3  
Old February 28th, 2010, 10:49 PM
Affiliate Manager
Join Date: January 5th, 2010
Posts: 38
very cool

good stuff, TxJackie!

Do you mind me asking, what is the average annual sales volume do you guys have (just some range as I understand it might be confidential).

And what do you think you guys do that makes your campaign so "clean"? From stats that I see EVERY network have some average ratio that they estimate for their campaigns based on annual data, and it sounds like it's growing and becoming quite an issue.
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  #4  
Old February 28th, 2010, 11:21 PM
Affiliate Manager
Join Date: February 10th, 2010
Location: On a Lake in the Middle of No Place
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I've only been marketing to my internal list for 15 years- that's probably why it is so clean. Would prefer not to talk about numbers in detail - but they are VERY good.

I've never advertised on a network or used affiliates before. Perhaps when I do that I will start to see a fraud problem. I hope not.
  #5  
Old March 1st, 2010, 12:20 AM
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We have fraud with hosting and it takes a coalition between the merchant, their fraud department, network and the affiliate manager. We flag suspicious orders then the team works together. Sometimes I reach out to the affiliate asking if they are aware and if they can do anything. It becomes very evident that they are participating in fraud based on their answers or silence.
  #6  
Old March 1st, 2010, 12:24 AM
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Join Date: June 12th, 2008
Location: Illinois
Posts: 14
I've worked with a few affiliate programs and quite a few different networks (Shareasale, Azoogle, Clickbooth, MaxBounty, CXDigital, EWA, Convert2Media, and a few others). I've worked with both traditional e-commerce physical product programs and lead generation offers.

When it comes to lead-based programs, I've seen a truly ridiculous amount of affiliate fraud - as in hundreds of thousands of dollars of fraudulent leads. The only way to get out of paying for those bad leads is to have iron-clad evidence of what's going on. Even having a dozen spam complaints on an affiliate isn't enough in a lot of cases - the affiliate will simply create a fake "opt-in" document and then remove the affiliates. Affiliates are also really, really bad about blanking out their referrers and using URL shorteners to hide what they're doing with your brand name.

Some will even take an offer form and embed it in a different kind of page to make people think they're signing up for something entirely different than they are. I recently saw someone run up 5-figures in leads by embedding the lead form in a page for Haiti earthquake donations - and the offer had absolutely nothing to do with that. If someone hadn't emailed to complain, the affiliate would have gotten away with it.

As long as you're getting a reasonable return on investment overall, networks have ZERO incentive to track and prevent fraud. Keep that in mind. It is extremely difficult and time-consuming to track down a skilled fraudulent affiliate, and they get commissions on the transactions...so it's pretty easy to see why they're not going to do any more than they have to.

With e-commerce/physical product programs, however, the problems are MUCH fewer. You'll find a lot of self referrers, junky coupon code affiliates, and trademark bidders, but for the most part, the affiliates are ok.

When it comes to customer fraud, I've seen VERY little, and nearly all of it was from Asia, Africa, or the middle east. I'd say less than 1% of the fraud I see is related to customers.
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  #7  
Old March 1st, 2010, 01:44 AM
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Quote:
Originally Posted by stefanie
With e-commerce/physical product programs, however, the problems are MUCH fewer. You'll find a lot of self referrers,...
Why do you mention this in a discussion about fraud? To include this can be quite insulting to honest affiliates who not only purchase products for their own use, but who do test purchases.
Quote:
Originally Posted by stefanie
...and trademark bidders...
Also inappropriate, as stated. Many astute, forward thinking merchants not only allow trademark bidding, but encourage it, and even if they do not, in most instances it is a violation of TOS, which is a far cry from fraud.
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  #8  
Old March 1st, 2010, 05:46 AM
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Quote:
Affiliates are also really, really bad about blanking out their referrers and using URL shorteners to hide what they're doing with your brand name.
There are a number of reasons that no referrer shows, not all of them caused by the affiliate. I am seeing more and more traffic with no referrer in my reports and I'm doing nothing to "blank out the referrer".
You are giving the impression that when no referrer shows it is because of something the affiliate is doing. Not an accurate assumption! If you want to know where you are being promoted, ask the affiliate.
  #9  
Old March 1st, 2010, 10:29 AM
Affiliate Manager
Join Date: January 5th, 2010
Posts: 38
Thank you, Chuck.

So, how exactly do you guys locate "suspicious" orders? What are the signs? And what is your process with networks to exclude them from commissions in time without setting everything on fire? lol
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  #10  
Old March 1st, 2010, 10:35 AM
Affiliate Manager
Join Date: January 5th, 2010
Posts: 38
And guys, hank your for your opinions. Would love to hear more suggestions on eliminating (or at least significantly reducing the fraud).

What would you suggest for a young program marketers with no fraud department formed yet? Some simple process....
  #11  
Old March 1st, 2010, 02:44 PM
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Quote:
As long as you're getting a reasonable return on investment overall, networks have ZERO incentive to track and prevent fraud
Reputable networks are very proactive about preventing fraud. Fraud affects the whole chain.
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  #12  
Old March 1st, 2010, 06:18 PM
Affiliate Manager
Join Date: September 23rd, 2007
Posts: 364
On one of my software sites I was getting 10 fraud orders a day for the first week or so. I tracked it down to a hacking site try to steal my software and null it. I still get a few but put in place a better fraud control where I wait about 24hrs to approve accounts. Usually within the first 12 hrs the transaction gets flagged.
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  #13  
Old March 1st, 2010, 06:41 PM
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Quote:
Originally Posted by loxly
Reputable networks are very proactive about preventing fraud. Fraud affects the whole chain.
Exactly. ShareASale in particular goes out of their way to ensure both fraud, affiliate program terms and conditions and ethical affilaite behavior is being followed.
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  #14  
Old March 3rd, 2010, 08:33 AM
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I used to get about 10 fraudulent orders a year, but then I changed my site to require the card's security code from the back - dropped my fraud rate to zero.
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  #15  
Old March 3rd, 2010, 11:53 AM
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Zero to both.

I've never got a customer fraud.

I require the security code from the back of the credit card.

I pay extra for AVS checks, meaning the address the customer enters must match whatever is on file with their issuing bank.

My order forms also require customer to check a box stating they are the cardholder, their IP address is tracked, and that they know we prosecute all cases of fraud.

Affiliate fraud? I have a small, manageable program. Between my OPM and myself, we know just about all our affiliates.

And Debbie pre-screens all applicants. Just yesterday, someone with a toolbar applied.

Also, a lot of fraud depends on your niche. Mine is personalized gifts.

If you're ordering a personalized baby bootie with the kids name, birth weight, time of birth, length and hospital... it's pretty hard to claim it was a fraudulent order
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  #16  
Old March 3rd, 2010, 02:28 PM
Affiliate Manager
Join Date: July 28th, 2009
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Only affiliate fraud I have really found (and turned in) were affiliates in pay-per-lead programs like Stefanie shared. Most of those originated in foreign countries and one poor sap got banned not only from CJ but got him banned on google adwords and they also stuck him with his $8,000 adwords bill from the whole situation.

Only consumer fraud I've seen involved paying by fake checks and I'll not go into details on that as we don't want to give anyone any ideas

It's having systems in place to catch that kind of stuff though that helps and prethink what people could do and setup roadblocks before the program begins.

The CJ team was very helpful in catching the couple of ones i've turned in for click fraud.
  #17  
Old March 5th, 2010, 03:08 PM
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Join Date: March 19th, 2009
Posts: 97
Send a message via AIM to brett-e2
We have a 60 day money back guarantee for our services, so to combat fake sales we have a 60 day hold on funds. It's proven to be pretty effective and all of our affiliates are very understanding of the reasons for it.
  #18  
Old March 5th, 2010, 05:03 PM
Affiliate Manager
Join Date: January 5th, 2010
Posts: 38
I am afraid...

networks wouldn't be that understanding as max they give 30 days... Well, at least in my experience... Hope I am wrong.. If so, about which network?
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  #19  
Old March 5th, 2010, 05:04 PM
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At Legacy 0%

At HometownQuotes with insurance leads about 0.5% of affiliates were frauds. Unfortunately they would often hit us with tons of leads before we could catch it so some days our bad leads % was as high as 6-7%.

Most days it was 1.5% or so.
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  #20  
Old March 5th, 2010, 05:05 PM
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Posts: 97
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This is our in house program. Like I said, I've never gotten complaints about it, everyone is pretty understanding.
  #21  
Old March 5th, 2010, 05:46 PM
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The longer you stretch out payment, the less affiliates will like it. Most won't complain, but many decisions will be made based on it.
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  #22  
Old March 7th, 2010, 01:05 AM
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Location: Bratislava, Slovakia (European Union)
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In the past we had fraud orders with stolen credit cards about 5%-10% of all orders.
After SWREG improved their fraud policy, fraud is about 1%.... in our case fraud level defines our payment processor quality and in affiliate program we protect just by delayed payout by 30 days.
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