So I was on a webinar today.
Rich Kahn, the guy who runs the advanced fraud detection company Anura, told everyone that 45% of affiliate leads are fraudulent.
Forty
Five
percent.
That is absolute insanity.
I’m not sure I believe him–in fact, I tend not to because that number is so insanely high that it would mean the entire affiliate industry is rotten to the core–but he has definitely opened my eyes to the EXTREME level of fraud out there.
The lead gen industry has failed to self police. Period.
If Rich is right, over a billion robocalls a month are being made without consent. And this is why the regulators are looking at shutting it all down.
Here’s the eye opening, world changing webinar:
For those of you who wonder why I have to move forward with R.E.A.C.H. this is why.
I know a ton of people are upset that I am pushing for REAL change out there. Some folks have stopped talking to me. Others have tried to keep me off certain stages.
That’s fine.
You can hide from me all you want. Live in your echo chamber. Convince yourself it is all going to be ok.
But you can’t hide from the truth. And with fraud numbers in the range Rich is discussing–the status quo is unsustainable. REAL change is coming.
Plus, I am tired of the good actors getting creamed. When folks try to do things the right way they see others in the industry surpass them on various metrics. We need to level the playing field so that everyone has to do it right.
If DTC marketing is going to have a place in American commerce it has to be done right. The incentives are apparently just not there for the lead suppliers to self police–45% fraud rates confirm it. So the buyers have to do it. And that means R.E.A.C.H has to become a reality.
I gave it as long as I could.
Great post, as usual!
I’m going out on a limb here but I actually think 45% is too LOW! I would put it at 99%. Sounds crazy, I know.
Here’s why:
Take a simple poll – ask ten friends two questions. 1) How many robocalls have you gotten? 2) How many did you opt in to?
They’ll tell you they got 5 auto warranty calls, 2 home alarm calls, 8 free cruise calls, 5 health insurance calls, and they didn’t ask for a single one.
That’s 100%.
In fact I don’t know a single person who asked to be called, ever.
I personally have gotten over 30 robocalls and never opted into even one.
Robo calls or unwanted calls don’t necessarily come from fraudulent advertising or lead generation funnels. (I would actually say that most of the auto warranty calls, etc, are coming from offshore call centers that are getting contact information from scraping websites or the dark web). Rich, was specifically talking about click and lead fraud within a cost per action funnel.
Michael, the auto warranty calls in particular almost always originate in the US. Ask me how I know. I have busted several of them. There’s a TON of them in Orange County, CA, though I’ve never been able to figure out why there in particular.
Also if you’re wondering where they get people’s info from, they get it directly from DMVs across the country, and also sometimes from dealerships. That’s why very often they’ll already know what make and model of car you have. There is a big gaping loophole in the DDPA, the bulk marketing exception, which allows DMVs to sell your info. And of course none of these people consented to get the prerecorded calls that the warranty folks make.
Eric it is true! On AVERAGE 45% of affiliate based traffic is fraudulent. Lead Gen companies flock to affiliates because it is a very cost effective lead source. However, with out a tool like Anura filtering the traffic, they are getting a lot of junk leads that lead to issues.
Affiliates are great to work with, but make sure you have the right protection in place otherwise you or your buyers could end up in hot water.
The real problem with the fraud problem is not at the lead generator or advertisers level, I would argue. While they do take some of the blame for lack of oversight, I believe the real lack of oversight and accountability is at the publisher and ad network level. Google, twitter, TikTok, don’t care about fraudulent clicks because they get paid on it too. It doesn’t hurt them, so they “regulate” it just enough and then stick their heads in the sand and allow the advertisers, and down the funnel, to take the blame.
Michael, I partly agree with your post, however I believe it is everyone’s responsibility to check the traffic they buy or sell. After all, no one cares more about your business than you.
Unfortunately, the law doesn’t care how you generated or bought the lead, if you make the call to someone that didn’t give you expressed permission to call then you are on the hook.
Fraud detection is so affordable there is no reason for a company not to have it.
We are in full agreement that everyone should be monitoring for fraud.
I suppose my comment was intended to level the field and not forget where the fraud is generated and by whom. My statement was directed in response to “the entire affiliate industry is rotten to the core” I think this is not accurate, unfair, and does not accurately take into consideration the nuance of how, when, where, and why there is fraud. Accountability is on all parties, mainly because big publishers do a horrible job and removing it themselves. Why? Because they make money from it and it doesn’t directly affect them., IMO.