Fraud traffic (bots, invalid and fake leads & sales) is probably the number one problem in the affiliate marketing industry. Its as simple as that.
A lot of networks are nowadays trying to solve this problem by giving their (new) affiliates a CAP to prove themselves.
Capping is not the solution. On the contrary. It enhances the problem and motivates fraud publishers to make duplicate accounts. At the same time it punishes good affiliates.
If the advertiser puts a cap there's nothing the network can do, but networks that put internal caps to fight fraud really don't understand how fraud works and even less how to fight it.
You can never eliminate fraud as a whole but what you can do is:
1. Calling your affiliates and submitting them to a phone interview before you approve them. That will already greatly filter the fraudsters. A good AM can filter the fake ones out. Some will slip through but the big majority not.
2. Implement an anti-fraud system (SaaS software). We work with Forensiq to filter not only our traffic sources but also our publisher sign up process so we get a better view on who we work with.
3. Analyze IPs. Most fraudsters will drive multiple conversions from the same IP, which never happens on a good traffic source. Or the IPs will be very similar and go in ascending/descending order.
4. Analyze conversion rates. If the conversion rate of any given traffic source is significantly higher than the average conversion rate on your campaign, then this could be an indication of fraud. I put this measure on the last place in our list because most fraudsters are smart enough to not drive insanely high conversion rates - they know affiliate networks look at this.
5. Verify their payment details, IP (including usage of VPN) and their personal identity
None of these measures will 100% eliminate fraud, but it will greatly reduce the probability of getting a fraudster onboard and will wipe out bot traffic entirely.
Could not agree more! I feel that the interview over the phone to be approved in does more than just a fraud check.. it starts that relationship between the affiliate and their AM. From my experiences CAP is always on the merchant and sometimes its due to volume and or products they have but yes a lot of the time its to "prove" we are worthy enough to run their campaigns.
Great post!