CPA Detective Fights Affiliate FraudWritten by Pace Lattin
December 7, 2010 # 2:15 pm # Specials # 3 Comments
David Sendroff knows fraud. In his role as the Chief Information Officer of Spire Vision, a major education lead generation agency, he sees tons of networks and affiliates try to defraud his clients. As he himself points out, networks seemed to be ignoring the issues and just “collecting checks.” So he decided to make a system in-house that would detect this fraud and help improve the overall quality of the leads. Instead of keeping his secret private, David has launched CPA Detective, an innovative new company that provides an overall solution for fraud detection, and something everyone needs to look at. We decided to sit down with David and ask him a few questions about fraud and the industry.
Was there a specific incident that made you wake up and notice that affiliate fraud was a huge issue?
What I found to be interesting was that as specific fraudulent data sources coming from an affiliate or sub affiliate were eliminated from affiliate channels, the same fraudulent traffic patterns would later appear through an entirely different account. At that point, I created the CPA Detective fraud tracking service because I realized that fraudsters would stop at nothing and the only way to have a true impact was to protect advertisers at the source.
What do you think the most significant issue in affiliate fraud is right now?
Everyone doing legitimate business is impacted by fraud. For some advertisers, we’ve actually identified upwards of 20% of their traffic to be generated fraudulently. They end up paying for leads that are irrelevant or have been recycled from other campaigns, which introduces inefficiencies to the system. Many advertisers have not been able to achieve the best ROI for their advertising dollar, so they do not realize the full potential of a well structured CPA campaign. Fraud detection corrects these inefficiencies by ensuring optimal lead quality so that legit publishers and networks are paid accordingly. Elimination of fraud will create more trust and transparency which will expand the number and types of advertisers who use performance marketing.
What is your opinion of the influx of CPA network companies that allow anyone to create a CPA network? What are the dangers?
The challenge is that the due diligence practices and preventative measures of many smaller networks are laxed because they lack resources. Affiliates opening their campaigns to these networks create a lot of vulnerability. Every extra link in a redirect reduces the transparency of the originating source, which introduces more fraud to the industry.
What is the most innovative or interesting method you’ve seen someone try to defraud an affiliate network?
It wouldn’t serve the industry for me to publicize all of the tactics. However, one of the most interesting tactics that I’ve seen was an affiliate using a distributed network of college students across the country to commit fraud by form filling leads. Fraudsters are becoming more sophisticated in the way they infiltrate affiliate networks to generate leads. We have seen the tools for committing fraud become more widely available and the old-school fraud prevention tactics are becoming less useful.
Why are so many affiliate networks refusing to get on the wagon and actively combat fraud? Do you think that perhaps some networks are engaging in fraud themselves?
Many affiliate networks are looking at the bottom line revenue and see traffic quality being the responsibility of the advertiser to monitor. Even if they had tools to detect fraud, it’s easier for a network to collect a check and take action when notified. Many advertisers also do not have the proper solutions to combat fraud, so networks are able to ride the wave for a little while before it becomes obvious.
What are some steps that people can take, outside of using your product, to start the fraud prevention process?
Networks should look for inconsistencies between area code, address, and IP location or even the story during the initial call. Watch out for the bank routing or address switch. Fraudsters are able to purchase pre-approved affiliate network accounts for a nominal fee, which throws all of the due diligence out the door.
Beyond that, look for irregular patterns with the traffic once it has commenced. You can also stay informed and participate in Facebook discussions and forums – industrypace.com is a great starting point!
As an advertiser you need to carefully choose your partners! Do business with networks that are known for their intense affiliate screening and fraud prevention practices. Require affiliate networks to provide you with sub-affiliate values for each lead generated so that you can isolate bad data sources. The best thing that advertisers and networks can do to prevent fraud is to stop paying for it. Even the smallest payment will keep fraudsters coming back for more.
What specific feature does CPA Detective have that no other company has? What difference does this make for advertisers?
Fraudulent affiliates can cloak, mask, and manipulate every element of their traffic to try to cover their tracks, but we can still detect fraud with certainty. We are experts in affiliate marketing and have maintained a fraud intelligence database for years. Advertisers are able to leverage the power of our database which is comprised of fraud patterns from every case that we identify. We combine cutting-edge technology and sophisticated fraud tracking algorithms specifically for CPA advertisers along with a service element that is customized for each client so that we become a powerful extension of your compliance team.
Some other companies are trying to enter the game this year, what should people be wary of when shopping for a fraud solution?
There are various options when it comes to data validation, compliance, and fraud monitoring services. Click fraud detection services are mainly focused on clicks, but they are not well versed in CPA campaigns that attract all sorts of other games that fraudsters play. Data validation services verify that the lead information matches a known database, which is useful but oftentimes irrelevant to CPA campaigns and can easily be compromised by fraudsters. The data itself generally does not provide proof of fraud, it’s the mechanism by which the leads were submitted. Strictly automated fraud detection solutions that rely solely on technology are missing the human component, which is critical given the ever changing tactics. If you are in the CPA business, find a company that specializes in CPA fraud.
I’m delighted that someone is really taking on the issue of affiliate fraud. CPA Detective is a company to keep an eye on as affiliate fraud is a serious issue, and I’m amazed that CPA Detective is one of the only companies out there. – Pace