The Definitive Guide to Affiliate Compliance

Affiliate channels will be a Win-Win relationship for both companies and partners if they are effectively executed. However, this marketing channel does not mean that there are no issues in compliance. Affiliate programs are an attractive target for scammers because affiliates have a chance to get a lot of money.

In 2020, fraudulent acts accounted for nearly 10 % of affiliate traffic. In this comprehensive guide, we delve into the world of compliance and monitoring deeply, why it is important, the types of problems that can occur in compliance violations, who regulates them, and affiliate for your business. I will explain how to maintain compliance.

What Is Affiliate Compliance?

Affiliate compliance is to comply with a series of rules, guidelines, regulations, and ethics for managing affiliate marketing programs. This ensures that all stakeholders, including affiliates and companies, are operated according to industry standards and legal requirements. Maintaining transparency, integrity, and legity is very important in all affiliate marketing activities.

Why Is Affiliate Compliance So Important?

In the era of digital marketing transformation, brands are increasingly migrating from media marketing programs to affiliate and partnerships as an important digital tool for online marketers. As CHEQ shown in 2021, these programs have contributed to 15%of the world's digital media revenue.

With its continuous growth, major brands track affiliate fraud. Affiliate compliance is the most important for various reasons, not just a todo list checkbox. In the era of influencers and social media, compliance violations quickly spread and affect the brand's reputation. According to FTC data, consumers have also announced more than $ 1. 2 billion due to social media fraud.

The two main reasons for affiliate compliance are the most important tasks of marketers strategies are reputations and brand regulation risks.

Brand Reputation

Brand's reputation is one of the most valuable assets. If affiliates act against ethics or acts against compliance, it is your brand that will result in the result. Customers do not constantly distinguish between affiliates and affiliates' brands. Unrelated and no n-ethical acts can cause trust in trust and irreparable damage to the brand's reputation.

Regulatory Risk

The world of digital marketing applies laws to protect consumers and ensure fair competition. In the United States, these are managed by the Federal Trade Commission. If affiliates do not follow these regulations, they are not only affected by affiliates themselves. Your business may be responsible. If you do not follow the regulatory requirements, you may cause serious legal results, such as fine and legal measures. This is especially true in industries with strict regulations such as finance and medical care.

Types Of Affiliate Non-Compliance

Partner violations can appear in various ways, each of which has its own tasks. It is important to recognize these issues to take effect effectively.

Paid Search Violations

Some affiliated companies may perform search advertising tactics that violate your brand guidelines. This may include the bidding of the brand keyword and the misunderstanding advertising copy. To compete with this, set a clear guidelines for keyword bidding and monitor the affiliate advertising campaign to ensure compliance.

Cookie Stuffing

Cookie stuffing is a fraud that affiliate installs cookies on user devices without the user's consent or knowledge. This expands the referral statistics, which leads to inappropriate commissions and distorted marketing performance.

Forced Clicks

Known as a click fraud, affiliates sometimes use tactics to make users click affiliate links, even if they are not really interested in products or services. Such no n-ethical tactics can lead to an increase in clic k-t o-view ratio, which does not affect the actual click rate and conversion rate. Observe click data carefully and pay attention to affiliates that are doing this.

Malware

Affiliates may unconsciously or intentionally advertise products and services, which are intentionally, and may damage user devices and develop them into legal issues. It also reduces the reputation of the brand.

Typosquatting

Type squatting, also known as a URL hijack, is a domain name similar to your brand's domain, and in many cases there are spell mistakes. A user who has typed the URL may access these sites and cause unauthorized affiliate rewards.

Mobile attribution fraud

Performance fraud is a type of mobile ad fraud where bad actors try to gain credit for app installs by falsely reporting manufactured clicks as final commitments just before a genuine user launches the app for the first time. In 2019, Uber fell victim to this scheme, resulting in a lawsuit against five ad networks, claiming that $70 million was affected by performance fraud.

IP Spoofing

Some affiliates may use IP skimming techniques to hide their true identity or location, making it a challenge to identify and address compliance issues. IP stripping involves manipulating the source IP address to fool the system that traffic is coming from a different location. This is used to create fake drivers or manipulate affiliate statistics. Recently, a brand in the entertainment sector overseen by Gen3 fell victim to such practices. The brand had to forfeit around $600. 000 in affiliate revenue as a result of IP removals organized through affiliate coupons and loyalty sites.

Pop-ups, Pop-unders, Hidden Windows

Affiliates may use intrusive advertising methods such as pop-ups, popup windows, and hidden windows to promote their products and services. Such techniques can lead to poor user experience and even the use of ad blockers, reducing the effectiveness of marketing efforts.

Stuck in a loop? Gen3 provides compliance solutions for a prosperous journey.

Who Regulates Affiliate Marketing?

In the field of affiliate marketing compliance, there are various regulations and guidelines that oversee this industry. Here are the main types of regulations:

Federal Trade Commission (FTC) Guidelines

In the United States, the FTC (Federal Trade Commission) provides guidelines for disclosing affiliate relationships and honestly promoting products and services. Compliance with these guidelines is paramount to eliminate involvement in deceptive advertising practices.

General Data Protection Regulation (GDPR)

In the European Union (EU), the GDPR sets standards for the collection, processing, and protection of personal data. The GDPR requires transparency and clear communication regarding data collection and use.

Advertising Standards Authority (ASA)

In the UK, the ASA regulates advertising practices, including those related to affiliate marketing. The ASA's mission is to ensure that advertising is fair, honest, and truthful.

Network-Specific Policies

Affiliate networks often develop their own policies and guidelines that they force their affiliates to adhere to. These policies may impose restrictions on certain advertising methods or set out requirements for accurate disclosure. Specific policies may also be found in the terms and conditions of the affiliate program offered by the network, which affiliates must accept when joining the program.

It is imperative for marketing partners to understand the nuances of these regulations and follow the guidelines. It is the cornerstone of operating within the legal framework and adhering to ethical standards.

How To Maintain Affiliate Compliance

Now that we have discussed the importance of partner compliance and the possible issues of non-compliance, let's look at strategies to maintain compliance in partner marketing programs.

Perform a comprehensive assessment of new affiliates entering your program.

Effective fraud prevention begins with a thorough screening of all new entrants to your affiliate program. This first step is crucial to thwart potential fraudulent activity. The location of the affiliate is an important indicator. Affiliates joining your program from Nigeria, India, and China should be vetted carefully.

Work With an Experienced Affiliate Marketing Agency

Gen3 has the tools and expertise to audit affiliates, monitor their activities, and ensure all marketing activities are aligned with your brand guidelines.

Understand Regulations

Stay up-to-date on regulations and laws regarding affiliate marketing in your industry and region. Compliance requirements can vary widely, and non-compliance can result in legal issues. Regularly review and update your compliance policy to reflect regulatory changes.

Use Clear Language in Marketing Collateral

Ensure that your marketing materials, including terms of use and affiliate agreements, are written in clear, easy-to-understand language. Provide affiliates with a comprehensive guide outlining compliance expectations, advertising guidelines, and code of conduct.

Monitor Affiliate Activity

Monitor affiliate activities regularly and identify potential compliance issues in a timely manner. Use tracking tools and analytics to monitor traffic sources, conversion rates, and the quality of leads generated by affiliates. Take immediate action against non-compliant affiliates.

Implement Fraud Protection Tools

Invest in fraud prevention tools and technologies that help detect and prevent fraudulent activities such as cookie stuffing and forced clicks. These tools can provide valuable information and data to support your compliance efforts.

Seek Legal Counsel

If you have any questions about the compliance or legal aspects of affiliate marketing, we recommend seeking advice from a legal professional or an expert in the field.

Affiliate compliance is not just a legal obligation, it is a fundamental aspect of maintaining your brand reputation and achieving long-term success in affiliate marketing. Failure to comply can have far-reaching consequences, including a damaged brand reputation and legal obligations. Remember, compliance is not a one-time effort, but an ongoing commitment to ethical and responsible affiliate marketing practices.

Maylena (Mae) Tavares is an MBA graduate and a dedicated, passionate professional who loves to take on challenges head-on. She has a 15-year career in the affiliate industry and currently serves as a Director at Gen3 Marketing. Specifically, she has provided expertise and leadership to the Gen3 family of agencies for nine years. Her track record shines with her experienced management of diverse brands across multiple industries including lead and B2B.