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Education is the Key to Combating Affiliate Fraud (Part 2)

This Part Two of a two-part series about how eBay is mounting efforts to up fraud detection and combat illegal and unethical behavior.

Policing fraud is time consuming, difficult and a never ending process. And while there is some self policing in the industry where known fraudsters are outed in forums and on message boards, the problem is too widespread for eBay and others to rely solely on those tips Wehrmaker says.

Because of its size, eBay admittedly has more resources at its disposal than most companies – financial, personnel and technology – to identify and deal with fraud issues.

eBay also relies on a variety of relationships with external consultants who specialize in detecting this type of fraud. They also keep in contact with law enforcement in hopes of educating them on the complexities of online fraud.

Wehrmaker says that law enforcement and stricter penalties can help curb these acts but not stop them. “It’s like robbing a bank. You can make the bank safer and threaten robbers with jail time, but you can’t stop people from trying to rob banks.”

Another factor that plays a big part in fraud is the anonymity of the Internet. It is often very hard to know who is perpetrating the fraud because they can so easily hide behind links that are redirected and masked. It is also compounded by the fact that much of the fraud comes from other countries – Asia and African – and is done via proxy IP servers.

In addition to educating law enforcement on how this fraud fits into existing computer laws, eBay is hoping that there will be more resources and education focused on the topic of fraud in the performance marketing space itself.

The performance marketing space is based on a web of derivative relationships. “You have a middleman, who deal with the another middleman and none of the people are sharing information backwards, says Wehrmaker. “The majority of the people in the chain might be legitimate but if there is any lack of visibility or lack of transparency, fraud can easily happen. We need more transparency.”

Martin-Gill says that affiliate managers need to be more demanding about dedicating the analytical resources to this issue and think about spending real money on fraud detection. He also suggests that more retailers and merchants running affiliate programs bring in seasoned program managers with the skills and experience necessary to understand such complex issues.

Martin-Gill also noted that in many cases misaligned incentives are part of the problem. The more money the affiliate program generates, the more the affiliate manager looks good to their bosses. That means that those overseeing the program often turn a blind eye to a publisher that seems to be bringing in an abundance of leads that might be subpar.

However, if those affiliate managers – along with their marketing directors – thought about new ways to calculate life time customer value or how to incentivize publishers, the bad actors would no longer be rewarded.

For the affiliate networks’ part, he says that both merchants and publishers need to be more demanding of networks – asking them to provide the capabilities to track it better.

“It will take an industry-wide effort to build out the technologies on the advertiser, publisher and network sides to stop fraud. But until we do, fraud will continue to be a serious issue that detracts from the legitimization of the affiliate space,” Martin-Gill says.

You can read Part One of this two-part article here.