If your business relies on lead purchasing to generate conversions, there’s a chance that you’re losing around 30% of your expenses, all because of the prevalence of lead generation fraud.
Fraud actors may attempt to deliver duplicate leads, inject automated bot traffic, or use compromised personal data to create invalid lead profiles. These practices can lead to financial losses, reputational damage, and potential legal exposure if non-consensual contact occurs, with penalties that may reach tens of thousands of pounds.
In this article, we’ll break down the most common lead generation fraud and arm you with essential fraud prevention tactics for safeguarding your business.
Book a free demo to see how Phoexa’s lead validation allows you to flag and cut off fraudulent traffic before your money is out.
Lead generation fraud stands for a variety of deceptive practices that aim to artificially inflate affiliate commissions by generating fake leads – such as bots or individuals with no interest in the affiliate product – that result in zero real conversions.
Fake leads are most frequently encountered when buying directly from affiliates. However, lead marketplaces, affiliate networks, and brokers may also overlook them due to system errors or improper lead validation, which is only exacerbated by the supply chain complexity.
| Wasted marketing spend | You erode your ROI by paying for fake leads. |
| Potential legal fines | If you contact a lead created from stolen data, you risk violating GDPR and PECR, and could face legal action and massive fines. |
| Demoralised sales reps | Sales reps who repeatedly contact fake leads lose morale, become less productive, and underperform, even when they finally reach a real person. |
| Data pollution | Wrong lead details inundate your web analytics, misleading your performance marketing optimisation. |
| Clogged system | Cleaning up CRM and lead management systems cluttered with dead-end leads wastes valuable time and resources that could be used more effectively. |
As technologies advance, bots get smarter, and an increasing number of bad actors use them for fraudulent purposes.
Source: Securityweek
Experienced criminals not only program bots to generate fake leads, but they also involve AI to make lead profiles more plausible and modify code to deliver data at a subtle pace that draws less suspicion.
Between 5% and 10% of all affiliate marketing transactions are affected by cookie stuffing – a technique fraudsters use to secretly inject a tracking cookie into a user’s system and claim commissions for sales they didn’t drive.
Common cookie injection methods are:
Since an injected cookie always wins last-click attribution, it leaves your legitimate affiliates undercredited, which may disrupt your business relationships and degrade your performance.
To inflate affiliate commissions, some publishers incentivise their audience to fulfil affiliate program conditions with rewards, such as paywall content or cashback. Since incent traffic is real people who, although not always, use valid information to submit forms, many of these leads may seem legitimate, but in reality, they never convert.
User data acquired through web scraping, black markets, data breaches, or phishing campaigns may be used to create non-consensual leads, contacting which exposes you to legal penalties. Additionally, it tarnishes your reputation, which can repel many clients and partners, especially for locally focused businesses, such as insurance.
When a fraudster attempts to sell the same lead repeatedly, either to a single buyer or multiple buyers, it’s called a duplicate lead.
Important note: Not every duplicate you flag is a fraud. Some users may submit your form multiple times across different resources, sending identical lead records into your system. That’s why it’s important to always clarify the causes of duplicates before taking radical steps.
Lead data validation is the process of lead screening, performed either immediately upon form submission or shortly thereafter, for additional checks. Although you can validate leads manually, it’s a time-consuming and difficult-to-scale process, so it’s best to automate it – something you can do with Phonexa’s LMS Sync, our lead management solution and one of our core modules.
Working hand-in-hand with Anura’s iClear, a built-in fraud detection software, LMS Sync enables automatic lead screening – address, email, phone, and IP verification – to flag and filter out fake leads before you pay for them.
With this holistic approach, iClear validation helps you mitigate most lead generation fraud, all under the hood, saving not just your money but also your time and effort, ensuring you focus on real, verified leads.
“Anura and Phonexa both cater to lead generators, affiliate networks, and brands that are looking to prevent lead fraud, and this partnership and integration are pivotal to protect our partners. Anura detects fraud with 99.999% accuracy with their industry-leading fraud solutions. That takes the guesswork out of fraud detection, making their tools a great asset to drive definitive results and improve conversions around marketing spend.” – Jeffrey Schaffer
Book a demo to get an inside look at LMS Sync capabilities and other lead management tools.
As mentioned, bots evolve, and along with their ability to fabricate lead data more naturally, they have also learned to solve CAPTCHA. Interestingly, they do it even better than humans.
Source: Scrapingapi
A more effective anti-bot solution now is reCAPTCHA, an update to traditional CAPTCHA that relies on behavioural analysis rather than ineffective puzzles:
Collected data is used to assign lead scores, based on which the system decides whether to block or accept users.
Honeypot fields are visually concealed form elements that are added to flag fraud. How? You can detect and interact with these fields only at the code level, which is exactly what bots, programmed to visit a specific page and submit a form, do.
Important: Since advanced bots can analyse and avoid honeypot fields, it’s recommended only to use them in combination with other security layers.
One of the most effective ways to reduce risk when purchasing third-party leads is to require documented proof of user consent. This typically includes verified records of when and how a user submitted their information, along with session and interaction data.
If affiliates or partners use your web forms, consent can be captured using iClaim. When the script is added to your forms, iClaim records consent events along with relevant session metadata. When integrated with LMS Sync, these records can be linked to corresponding lead submissions and made available within your reporting environment. Consent logs are exportable and can be used to support audits, compliance reviews, and dispute resolution.
As simple as it sounds, monitoring leads that hit your lead management or CRM systems is great for identifying lead generation fraud.
Here’s what to be on alert for:
When suspicious activity is on the radar, trace dubious leads back to their affiliates and pause purchasing from them for investigation. Time-to-conversion rates, emails, geolocations, and other lead attributes will help you flag fake leads, and you can then factor in the discovered vulnerabilities to fortify your system.
Validating leads and storing consent records are just a fraction of what Phonexa offers. Geared toward performance marketing, our core solutions – LMS Sync and Call Logic – take care of your web leads and callers, enabling:
“What we do best is actually giving you the robust capabilities not only to do call tracking in a silo or lead tracking and distribution in a silo, but everything from every customer interaction, while also doing the payouts for those publishers. You can handle payments in our platform and manage all of your affiliate marketing programs inside of one tool.” – Talar Malakian from Revolutionizing B2B Marketing webinar
We also have a best-in-class reporting system. Delivering in real time, it translates results into performance snapshots that you can easily share with your partners to ensure timely campaign adjustments and preserve more opportunities.
Here are the two core products you get at a single price:
| LMS Sync | Lead tracking & distribution software |
| Call Logic | Call tracking & distribution software |
Here are the six extra features you get as a client with Phonexa:
Book a demo now to see how Phonexa’s features work together to amplify your performance marketing across the board.
Fake lead is a broad term encompassing all types of fabricated leads, including lead bots, which are computer-driven and designed to mimic human behaviour.
Since manual lead validation is slow and complex, it’s only relevant for businesses with low lead turnover. Those who purchase leads in bulk need automated validating software to handle their inbound volumes efficiently.
Lead validation, which factors in both lead attributes and IP historical patterns, is a well-rounded fraud-prevention system that accurately flags fake leads, regardless of their type.
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