Honey trap: How brands can identify and stop affiliate fraud

Advertising fraud is a rising challenge facing brands. The issue is becoming more prominent, with PayPal-owned browser extension Honey recently hit with accusations of carrying out a sophisticated form of ad fraud.

Affiliate marketing is a popular tactic leveraged by brands, but it is being targeted by fraudsters. They exploit affiliate campaigns and take profits for themselves unnoticed, and to stop them, brands need to be aware of their tactics.

To protect budgets from fraud, brands must adapt to their methods. Fraud is strongest when hiding behind the scenes, but knowing the signs to look for can prevent it.

Manipulating affiliate commissions

With affiliate marketing, brands can work closely with creators and benefit from their pre-established audience for promotion. The low-cost high-reward nature of this strategy has made it incredibly popular. This relationship requires trust, but Honey was accused of misrepresenting itself to consumers while stealing from content creators.

The brand reportedly stole commissions that should’ve been attributed to the creators promoting it. If consumers installed Honey’s extension and followed a creator’s affiliate link to make a purchase, Honey could substitute its own link at the last second.

This allowed Honey to capture the final click at purchase. Commissions that should have been rightfully attributed to creators were instead taken by Honey. This isn’t a challenge exclusive to content creators, companies are facing the same losses without even realising.

Fraudulent practices like cookie stuffing are siphoning away brands’ budgets. The situation with Honey isn’t unique, it represents a broader problem afflicting affiliate marketing. Fraud isn’t just being carried out by individuals, but major platforms like Honey. If companies remain unaware of the risk of ad fraud, their budgets will continue to be siphoned.

The ad fraud epidemic

Affiliate marketing fraud is a pervasive challenge in the industry. The Honey lawsuit highlighted the issue of affiliate fraud, but it’s only one example of the damage fraud has already been causing. Budgets, partnerships and campaign performance are all directly impacted by affiliate fraud, and it is becoming increasingly sophisticated.

Brands’ attribution models typically credit the first and last clicks in affiliate campaigns. Fraudsters can manipulate these crediting systems by exploiting their inherent vulnerabilities. This allows them to claim commissions that should be attributed to genuine partners.

A popular tactic leveraged by fraudsters is cookie stuffing. Fraudsters will attach irrelevant third-party cookies to users after they visit a legitimate affiliate’s website or click their link. If the user then makes a purchase the target site, the bad actor will be credited instead of the genuine partner driving the traffic.

Honey claimed attribution by triggering referral clicks that operated “behind-the-scenes” to place a cookie. The brand carried this out using two different methods. The first was to invite users to click on a discount code and copy it into memory. A hidden referral click would then be generated in the background by Honey to claim attribution without the user being aware.

The second method was to invite users to apply a promo code. A new window would be opened by Honey secretly to trigger a referral click before shutting down the window without users noticing.

This fraudulent practice misleads businesses and demonstrates a growing risk to affiliate campaigns. Companies are paying for a service they’re not receiving while fraudulent affiliates take the profits. Budgets are further wasted as companies mistakenly optimise towards fraudulent sources believing they are driving engagement. Legitimate affiliates are then ignored in favour of bad actors, and companies face long lasting damage to their finances and reputation.

Uncovering fraudster’s tactics

To protect budgets from malicious affiliates, advertisers need to identify their tactics. Affiliate fraud succeeds by staying under the radar, so to combat this advertisers need to take a more proactive role in identifying it.

This can be achieved by actively monitoring your metrics and traffic to uncover fraud before it can harm budgets. Ad fraud has tell-tale signs, some examples are:

• An influx of traffic from suspicious sources.
• A surge in conversions without an increase in organic traffic and engagement to match it.
• Affiliates being paid for high commissions without evidence of their contribution.

These could be signs of cookie stuffing with the intention to steal attribution. Advertisers should be screening new partners and reviewing their platforms to ensure they’re legitimate partners. Advertisers can then protect budgets and weed out unethical affiliates.

Protecting budgets and driving growth

Brands have been given the opportunity to reach a wider audience with affiliate marketing. However, they can’t truly drive revenue growth with advertising fraud eating away at budgets behind-the-scenes.

Fraud tactics are constantly evolving and becoming harder to detect. By regularly monitoring metrics, advertisers can identify the signs of affiliate fraud and stop it at the source. Brands can then rest assured their budgets are protected, and the right affiliates are rewarded.

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