Fraud in traffic arbitration – concept and consequences

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Fraud in traffic arbitration – concept and consequences

To make money, your business should have paying customers. To get paying customers, you should be seen and heard, so you need to get a lot of incoming traffic. This is where affiliate marketing comes into play, as many advertizers offer their traffic, and arbitrage specialists evaluate whether it is relevant to your target audience’s needs and will convert into customers.

Unfortunately, this is where fraud in traffic arbitration comes in. As website owners can’t check the traffic quality before it reaches their landing pages, tricky advertisers indulge in fraudulent schemes with CPA networks and traffic arbitrage specialists. This leads to businesses paying hefty sums for sub-par or even trash traffic that results in no conversions and no revenue. How to prevent fraud in traffic arbitration then?

What is affiliate fraud?

According to Investopedia, affiliate fraud is any unscrupulous activity aimed at generating unwarranted commissions from an affiliate (referral) program. When someone brings in a ton of leads that don’t result in live accounts that generate revenue — it is a clear case of affiliate fraud. However, there can be many more schemes (sometimes quite technologically elaborate) that might result in your company losing significant sums on trash traffic.

In order to prevent that, every business dealing with affiliate marketing must follow three rules:

  • constantly evaluate the incoming traffic
  • block fraud in traffic arbitration at once
  • use reliable tools to prove your ground in arbitration disputes.

Anti-fraud system to stop affiliate fraud

As enterprise-grade fraud prevention and risk mitigation system, Covery has a fair share of expertise in dealing with affiliate fraud. We have the anti-fraud tools in place to ensure timely control of incoming traffic, detection of fraudulent schemes, and their closure to minimize your expenses and losses to fraud. How does it work?

Covery provides certain features for dealing with affiliate fraud — Trustchain, device fingerprinting, behavioral analysis, flexible risk scoring model with a rule-based risk logic engine, and a supervised Machine Learning algorithm. We will briefly cover them below.


Using blockchain logic, Trustchain is a continuous chain of trust records distributed between all Covery community members. Whenever a new account is created in your system, you can check it against your website, industry, or global ledger. It might reveal that the phone number and/or email address (or other hardware and software identifiers) used in this account were previously noticed as a part of a fraudulent scheme. 

Or it might show that, while being a legitimate customer, this person applying for a credit is actually a frequenter of online casinos and has standing debts with other creditors, etc. Trustchain can provide a ton of information, and the more customers join the Covery community, the more records there are. As of May 2022, there are above 500 million user records, which helped identify nearly 200 million fraudulent transactions and saved our customers above 5 billion in potential losses.

Device fingerprinting

As mentioned above, every account has certain hardware and software identifiers, defined by the device used to log in. These IDs include the OS running, the browser version, the set of add-ons and plug-ins installed, the CPU and video card identifiers for desktop, or the mobile device unique identifiers, screen resolution, language preferences and many, many more.

A combination of these IDs forms a unique device fingerprint, which can be captured by Covery and added to a database. This data is later used in risk logic evaluation and fraud prevention.

Flexible risk scoring

Any user and transaction monitored by Covery have a dynamic and flexible risk score. It depends on the device fingerprinting input, the Trustchain reputation records and the behavioral analysis of the user.

To automate dealing with large volumes of traffic, Covery uses a flexible rule-based risk logic engine with supervised Machine Learning algorithm. You can configure any needed number of scenarios based on customer behavior and risk score. From simplifying login for trusted users to requesting 3DS verification for risky transactions — there is a wide field of applicable actions.


As a result, Covery can timely analyze both your logs and the live incoming traffic and identify affiliate fraud on the fly. While this can’t protect you from unscrupulous advertisers, it can nip fraud in traffic arbitration in the bud and save you a ton of time and resources.

As enterprise-grade risk mitigation and fraud prevention system well-known in the USA, UK and wider Europe, Covery offers a wide range of services that cater to all risk management-related needs of your business. To explore the capabilities we offer and the value you can get from Covery, order a free demo and we will be glad to answer your questions.