As someone who’s been in affiliate marketing for a while, I’ve learned a lot about the scams out there. Affiliate Marketing Scams can be tricky, but I want to help you spot and avoid them.
Whether you’re a budding affiliate marketer or a seasoned pro, it’s crucial to stay informed about these scams.
In this guide, I’ll show you the Major scams in affiliate marketing and give easy tips to stay safe. We’ll make sure you can keep your money safe and do well in affiliate marketing. Let’s start learning how to beat those scams!
Content Outline
How Much Money Can You Earn with Affiliate Marketing?
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In affiliate marketing, you can earn a lot of money. Some famous affiliate marketers like Pat Flynn have made over $100,000 in just a month.
Another marketer, Zach Johnson, earns over $100,000 every year. In sports betting, Shahbazyan makes between 25-40% commission for life on the money his referrals bring in, making about $2 million each year.
This shows there’s big money in affiliate marketing for the top performers.
Dark Side of Affiliate Marketing
The amount of fraud in affiliate marketing varies a lot and can be different depending on what’s being sold. For example, as many as 25% of app installations might be fake, often due to what’s called “attribution fraud,” where credit is given to the wrong source.
According to data from CHEQ, which looked at over a trillion ad views across 39 industries and talked to experts, about 9% of affiliate marketing is fraudulent.
However, this 9% might actually be a low estimate. Some marketers say they find a lot more fraud in their affiliate programs.
Just a few years ago, the University of Illinois thought that nearly 38% of Amazon’s affiliate partners were involved in some fraud.
Ad fraud, which includes affiliate marketing fraud, was reported to cost advertisers $81 billion in losses last year. In 2024, this figure is predicted to rise by 25%, amounting to a staggering $100 billion.
Also, CHEQ has noticed that in their PPC (Pay-Per-Click) clients, there’s a high amount of affiliate fraud. This contributes to about 14% of clicks in paid search and social media campaigns being invalid. They see this across big companies, ad agencies, and medium-sized businesses.
CHEQ is looking into a situation where a company that gives out personal loans is dealing with a lot of fraud from their affiliate marketing.
About 9.6% of the activity from their affiliate channels is fraudulent. This fraud is causing a big problem called “loan reverses.”
What happens is the loan company approves a loan based on certain rules, but then they have to cancel it because they find out the details are fake or not true.
Because of this, the loan company ends up having to cancel a lot of loans, especially those that people are likely not to pay back.
Using software like CHEQ for PPC can help stop this kind of fraud and protect the company’s money.
Most Common Methods of Affiliate Fraud
1. Cookie Stuffing
Cookie stuffing is a form of affiliate marketing fraud where fraudulent affiliates load many different cookies from various networks onto a user’s browser without their knowledge or consent.
This is done to trick tracking systems and generate false commissions.
When a user visits a merchant’s site and makes a purchase, the fraudster, not the legitimate affiliate, earns the commission.
This practice damages the true purpose of affiliate programs, which is to reward genuine efforts in driving traffic and sales.
The consequences of cookie stuffing are severe. Merchants can lose money to unearned commissions and face chargebacks, significantly damaging their reputation.
The impact extends beyond financial loss, as it erodes the trust that merchants place in affiliate networks.
Legitimate publishers who invest time and effort in creating quality content also suffer. They lose credit for the traffic that should rightfully be attributed to them.
This unethical behavior by fraudsters not only affects the publishers’ reputation but also harms the trust between them and merchants.
Even if a publisher’s website is not directly involved in unethical practices, being associated with stuffed cookies can lead to severe direct and indirect repercussions.
In 2014, there was a big case involving Shawn Hogan, who was the CEO of Digital Point Solutions, a well-known online marketing company.
He got into legal trouble and was sentenced to five months in federal prison. This was because he played a major part in a scam that cheated eBay out of about $28 million.
He did this through a complex method called cookie stuffing, which tricked eBay into paying him marketing fees he didn’t actually earn.
This fraudulent practice remains a challenge that both merchants and legitimate affiliates must actively work to combat.
2. Attribution Fraud (app installs)
Attribution fraud is a sneaky way people steal credit for mobile app installs. They trick systems into thinking they helped someone install an app, even when they didn’t.
This is about claiming they were the last ones to interact with the user before the app was downloaded. It’s like taking credit for something you didn’t do.
For example, in 2018, Google found that two apps, Cheetah Mobile’s File Manager and Kika Keyboard, were falsely claiming credit for app installs by creating fake clicks.
A big case of this happened with Uber. They found out they were tricked out of over $70 million because of attribution fraud.
Kevin Frisch, who used to work at Uber, discovered this when he reduced their spending on mobile app ads but didn’t see a drop in new app installs.
It looked like these installs were paid for, but they were actually coming in naturally. He found things that didn’t add up, like an app with only 1,000 users supposedly leading to 350,000 installs of Uber’s app.
It turned out that fraudsters were using malware to create fake reports of app installs. This malware listened for when a user downloaded a new app and then quickly claimed credit for the install, even if it was done naturally or by another advertiser.
3. Typo Squatting
In this strategy, affiliates create website domain names that are similar to a merchant’s website but with intentional spelling mistakes.
For example, if a merchant’s website is “example.com,” the affiliate might create a domain like “exampl.com” with a missing “e.”
When a user makes a mistake and types in the misspelled domain name, they end up on the affiliate’s website.
From there, the affiliate quickly redirects the user to the actual merchant’s website through a special link provided by the affiliate program.
If the user goes on to make a purchase on the merchant’s website, the affiliate gets credit and earns a commission for bringing in that customer.
4. Loyalty Software
In this tactic, affiliates install special “loyalty” software on a user’s computer. This software reminds the user about potential rewards, points, or benefits they can get when they buy things from specific merchants.
When the user tries to visit a merchant’s website directly, this loyalty software steps in and automatically directs them through the affiliate’s special link.
This means that even if the user didn’t sign up for or use the loyalty service, the affiliate still gets a commission for any purchases the user makes.
5. Deceptive Affiliate Marketing
Sometimes, affiliates who promote products online can be involved in scams. The Federal Trade Commission (FTC) has investigated such cases.
For example, they took action against affiliate marketers who offered a “free” trial but ended up charging $1.03 for it. People who thought it was free were actually charged almost $200 every month for another product they didn’t want.
The FTC also goes after schemes that promise to reveal secrets to making money through affiliate marketing. In one case, a group called My Online Business Education (MOBE) had to pay over $4 million for running a fraudulent coaching and investment scheme.
People paid as much as $60,000 for MOBE’s “mentoring” services, and the FTC said that these so-called affiliates helped MOBE trick people with false earnings claims.
In addition, some scammers use fake clicks and spam to cheat the system and get credit for sales. One sneaky tactic is called “diverting,” where fraudsters redirect people away from an affiliate’s website to their own.
When these redirected buyers make a purchase, the fraudsters get the commission instead of the original affiliate.
To protect your advertising campaigns from these dishonest practices, you can use a tool like CHEQ. It helps block fake clicks and fraudulent activity on major advertising platforms like Google, Facebook, and more.
This cybersecurity tool prevents fake or non-human users from clicking on your ads, saving you money that would otherwise be wasted on invalid clicks.
6. Get-Rich-Quick Schemes
We’ve all come across those flashy advertisements and catchy headlines that promise to make you rich quickly.
Some affiliate marketing programs and products use these claims to attract you to promote their offers. However, these promises often don’t match reality, making it difficult to achieve real success.
Building a successful affiliate marketing business is possible, but it usually doesn’t happen overnight. It requires hard work, persistence, and a willingness to learn.
Let’s look at a case study called My Online Business Education (MOBE). MOBE claimed to have a “proven” 21-step system that could help people make a lot of money by promoting their products as affiliates.
The catch was that they charged thousands of dollars for different membership levels. However, the Federal Trade Commission (FTC) didn’t believe MOBE’s flashy claims.
They accused MOBE of tricking customers with dishonest marketing tactics and failing to deliver on their promises. This left many customers in serious financial trouble.
7. Pay-to-join Affiliate Programs
Pay-to-join affiliate programs are not very common these days, but it’s still important to know about them in case you come across one, especially in specific industries.
In simple terms, these are affiliate marketing scams where they ask you to pay money or buy something before you can become an affiliate.
This is a big warning sign because legitimate affiliate programs should always be free to join. While some programs may require you to have a certain audience size or some experience, they should never ask you for money.
Remember, in a real affiliate program, they should be paying you, not the other way around. You’re supposed to help them sell products, and they don’t take any risk if you don’t make sales. So, be cautious if they’re asking you for money upfront.
8. Fake Gurus And Courses
A prevalent scam in affiliate marketing is when individuals promote fake products or services. Often, these people pose as experts and sell courses or coaching programs that promise incredible outcomes. However, they may be teaching methods that are either outdated or unethical.
The problem with these so-called “gurus” is that they don’t actually practice what they preach, or they may have stopped doing it a long time ago.
Their main source of income is selling these courses, not from their own success in affiliate marketing. If you ever want a refund for the course, it’s usually very difficult to get one.
Now, let me share a personal experience. I once fell for a content writing scheme where I paid about $100 for a course that promised to teach me how to become a successful content writer.
Unfortunately, the course turned out to be poorly organized and filled with outdated information. The so-called “expert” behind it seemed more interested in making money from course sales than genuinely helping people succeed in content writing.
It was a frustrating and disappointing experience that taught me the importance of researching thoroughly before investing in any online program or course.
9. Pyramid Schemes And MLMs
I’ve come across various affiliate marketing scams and schemes, and some of them are cleverly disguised pyramid schemes or multi-level marketing (MLM) schemes.
Imagine these scams as programs that pretend to be legitimate affiliate training courses, targeting people who want to make money online.
However, they’re actually designed to make money by recruiting new members into the scheme.
Let me give you an example with Empower Network. Initially, it seemed like a real service for improving blogs and SEO (search engine optimization).
Members paid $25 per month to have a website on the Empower Network’s domain. The idea was to bring in more people and boost search engine rankings.
However, when the Empower Network domain faced penalties and lost search traffic, they shifted their focus to more expensive marketing modules. This made fewer people want to join, and there was less money flowing between members.
Eventually, Empower Network fell apart, and many people labeled it a pyramid scheme or an affiliate marketing scam because of how it operated.
10. Fake Products Or Services
In the world of affiliate marketing, there are programs in adult-related areas like pornography, gambling, and legal highs.
While many of these programs are legitimate, some might try to deceive you into promoting illegal or fake products. Getting involved with such products can get you into serious trouble.
It’s important to remember that just because a program is in an adult niche, it doesn’t mean you should compromise your morals or risk your reputation.
Always do your research and only promote products that are legal and come from trustworthy programs.
Let’s look at a cautionary example of how things can go wrong. There was a product called StealthGenie that offered high commissions and keywords for good search engine rankings.
It seemed like a great opportunity for our affiliate site, which focused on privacy. However, things turned dark.
StealthGenie was a mobile spyware app that allowed people to monitor someone’s phone secretly without their knowledge.
It was used for shady purposes, like spying on partners, employees, or even parents. This app broke federal wiretap laws, and the FBI got involved.
They shut down the website promoting StealthGenie, and the CEO of the company was arrested in 2014.
He later pleaded guilty and faced a hefty fine of $500,000. As a result, the app became illegal and unavailable.
Fortunately, my affiliate site narrowly avoided disaster. We had prepared content and a new section for my site to promote StealthGenie but decided to cancel it at the last moment. After seeing what happened to the CEO, I was relieved that we made that choice.
How do you avoid Affiliate Marketing Scams as an affiliate marketer?
1. Review Affiliate Program’s Terms & Conditions:
What to Do: Carefully read the terms and conditions of any affiliate program before signing up.
Why: Legitimate programs should be transparent about how they operate. Look for clear information on how the program works, what you earn commissions on, how you get paid, and any restrictions.
Example: If you come across an affiliate program promising unrealistically high commissions without clear explanations, it could be a red flag.
2. Request Testimonials:
What to Do: Ask the company for testimonials from affiliate partners or search for reviews online.
Why: Hearing from others who have experience with the program can provide insights into its reputation, reliability, and payment practices.
Example: If you find multiple affiliates praising a program’s fairness and timely payments, it’s a positive sign. Conversely, if you find many complaints about non-payment, be cautious.
3. Try Customer Support Services:
What to Do: Contact the company’s customer support to gauge their responsiveness and willingness to assist you.
Why: A trustworthy affiliate program should offer good customer support to help its affiliates succeed.
Example: If you reach out with questions and receive prompt, helpful responses, it suggests that the company values its affiliates. However, if they ignore your inquiries or provide vague answers, it may be a warning sign.
4. Check Company’s History:
What to Do: Investigate the company’s history, financial stability, and growth in the affiliate marketing sector.
Why: Established companies with a track record of success are more likely to have legitimate affiliate programs.
Example: If a company has been operating in the affiliate marketing space for many years and consistently reports growth, it indicates stability and credibility.
5. Examine Search Results:
What to Do: Search for reviews and information about the affiliate program on search engines like Google.
Why: User reviews and news articles can reveal the program’s reputation, both positive and negative.
Example: If you find numerous positive reviews from credible sources and a lack of serious complaints, it suggests a reputable program. Conversely, an abundance of negative reviews and scam reports is a warning.
6. Check If Anti-Fraud Policy Is Available:
What to Do: Look for an anti-fraud policy or fraud prevention measures on the program’s website.
Why: A legitimate affiliate program should prioritize preventing fraudulent activities, which is in the interest of both the company and its affiliates.
Example: If a program openly shares its anti-fraud policy and measures, it shows a commitment to maintaining integrity within the affiliate marketing system.
7. Look for Free Signups:
What to Do: Verify whether the program requires a payment to join. Most affiliate programs are free.
Why: Requiring payment for joining an affiliate program is uncommon and can be a sign of a scam.
Example: If you come across an affiliate program that asks for a substantial upfront fee to participate, it’s best to be cautious and investigate further.
By following these steps and being vigilant, you can increase your chances of joining legitimate affiliate programs and avoid falling victim to affiliate marketing scams.
My go-to mantra
To Identify Affiliate Marketing Scams as an Affiliate Marketer, here is my go-to Mantra:
My go-to mantra as an affiliate marketer to steer clear of scams is a simple but effective strategy: I meticulously review program terms, seek genuine testimonials, test customer support responsiveness, investigate company history, analyze search results, verify anti-fraud measures, and always confirm that sign-up is free.
This mantra has served me well, helping me build fruitful partnerships with trustworthy affiliate programs while sidestepping any potential scams.
Vigilance and thorough research are my guiding principles for sustained success in the world of affiliate marketing.
FAQs on Major Scams in Affiliate Marketing
👀What Are Common Scams in Affiliate Marketing?
Common scams include pyramid schemes, where earnings are primarily based on recruiting others rather than actual sales; fake products or services; and programs that require you to pay a large sum upfront with the promise of high returns.
🧐Are High Commission Offers Always Scams?
Not always, but offers that promise unusually high commissions, especially for products or services of dubious quality, can be red flags. Research the company and product thoroughly before committing.
❓What Should I Do If I Encounter an Affiliate Scam?
Stop all promotions immediately. Report the scam to the platform where you found the affiliate program, and consider filing a complaint with relevant consumer protection agencies.
😶Is It Safe to Give Personal Information to Affiliate Programs?
Be cautious. Only provide personal information if you are confident in the legitimacy of the affiliate program and it's necessary for payment or tax purposes.
🚩What Are Red Flags to Watch Out For in Affiliate Marketing Offers?
Warning signs include promises of quick riches, requirements to purchase expensive starter kits, lack of clear product or service details, and programs that focus more on recruiting new members than on sales.
Quick Links
- Affiliate Marketing Secrets
- Affiliate Marketing for Beginners
- Best Affiliate Marketing Forums
- Affiliate World Global Dubai
Conclusion- Major Scams In Affiliate Marketing In 2024
As an experienced affiliate marketer, I cannot lay more stress on how important it is to know that affiliate marketing can be a great way to grow your business.
But not everyone you work with is trustworthy. Some people might try to do bad things online, like hacking and fraud.
So, you need always to be careful when you’re online. I’ve shared important information based on my experience and knowledge in this field about common scams in affiliate marketing and how to spot the warning signs when you’re dealing with affiliate partners.
It can be a bit tough to keep an eye out for these things, especially as your business gets bigger. But it’s a job you can’t ignore.
Remember, your success in affiliate marketing depends on both the good opportunities you grab and the scams you steer clear of. So, stay sharp and watch out for anything that seems fishy.
