Trademark-infringing fake blogs fraud?

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fraud_small.jpgDM CONFIDENTIAL — Calling the world of trademark infringing fake blogs marketing fraud might sound to some a little severe.

If we look at the advertiser’s point of view, one that has worked on bringing a continuity product to market from scratch as opposed to one brought to market in expectancy of leveraging a certain marketing technique, that’s just what it is. And, it is just one of many factors facing someone trying to enter into this game from scratch. Not surprisingly, the risks become greater the more distracted one is in the pursuit of profit and wanting a hit continuity program whose risks they aren’t necessarily aware of.

That’s where we come in. Part 1 set the stage and introduced the notion of marketing fraud. Here is Part 2, we look at another form of fraud that is equally dangerous and disruptive, that of affiliate fraud and consumer fraud. They have existed as long as marketing fraud, and are at some levels more insidious. With marketing fraud at least, a decently savvy advertiser can start to piece together parts of where their traffic comes from. The further down the funnel you go, into the transaction level, you might think more transparency exists, but it doesn’t.

The same reasons that you as an advertiser (or you bringing the advertiser to market) want to make money off this landscape (low barriers to entry + high liquidity), are the same reasons that bring the less than honest affiliates and consumers to commit fraud. They want to make money, and it doesn’t seem especially difficult to do so. Unfortunately, they are right. Unlike marketing fraud, which at some level is perpetrated by the affiliate to increase conversions, the most classic definition of affiliate fraud is more straightforward.

It involves placement fraud that generate conversion that have little likelihood of benefiting the advertiser. The classic case is when a non-incentivized campaign gets placed on an incentivezed placement. Lead generation campaigns are especially vulnerable as it requires little to complete a conversion and placing them in a co-reg path can lead to copious amounts of leads. In placement fraud, the affiliate knowingly looks to make money by doing what the advertiser and/or network do not want.

Getting back to the case of you being the media agency bringing a new campaign to market, you could be the most upfront and transparent operation possible and still run into issues. Let’s rephrase, you probably will run into issues. Your next hurdle, besides an offer being placed where you don’t want it, something that happens most often when you don’t control placement on the individual site level.

And, it more often than not involves some form of incentivized site as they a) have tons of volume, b) always have room for more offers, and c) are one of the few places where continuity in scale works. Understanding and anticipating this, you would probably work with the advertiser to have them OK running on incentivized traffic. Getting permission is in this case better than asking for forgiveness. The hidden danger you can’t necessarily control here is consumer fraud.

Consumer fraud has been around for years, but it didn’t really hit the incentive space in force until 2006, when information on how to cheat these sites became more available, such as using gift cards for many free-trials combined with readily accessible outsourced labor that could act as alternate personalities. The newest hurdle is identity theft.

It has become easier and easier for nefarious characters to gain access to credit card data that they can as a result ravage the second tier cash back sites. By the time the users start to see the charge, the money has been paid from the advertiser to the network in company. And, when they do start to see the fraud, the advertiser, especially the more novice ones, will be fighting all sorts of internal battles – such as keeping their merchant account active and dealing with customer service headaches. If it’s a company that ships real goods, they won’t just have the money paid for the free trials, they will have costs of the product and shipping. Like viruses on the internet, attacks will happen, but until you experience it first hand, you have no idea just how dangerous releasing a product can be – even a good grasp of the market and following best practices, like true transparency.

Bringing a product to market is truly swimming with the sharks. It’s so easy to sit back and think that these issues won’t happen to you, that you will market the product above board, but it’s not really up to you. Bringing a product to market in this environment is jumping into shark infested waters with chum in your suit, so you better come prepared, because they don’t care who you are. You might get lucky and have only a nominal amount of fraud – where you see little to no marketing fraud and a low amount of customer complaints – but that is becoming the exception not the rule. Being the one to get a product to market is not just potentially rewarding but intoxicatingly exciting.

Just like drinking and driving, don’t let that intoxication get in the way of proper planning and expectation setting. It doesn’t mean not to bring a new advertiser to market, it simply means be aware that the issues they could face are potentially crippling to one that doesn’t have prior experience.

We can’t all find the dream client, one with a great continuity product, years of experience handling high volumes of free trials, and no exposure to online. We will have to take a chance and nurture some clients, but that nurturing takes much more work than one who has only viewed the landscape from the sidelines would ever expect.

Courtesy of DM Confidential editor

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