A guide to lead generation fraud and how to prevent it
With the rise of ad fraud cases, there’s also an increase in TCPA-related litigation. In a survey conducted among marketers in 2022, 85% of respondents expressed concern over ad fraud. Therefore, it’s crucial to understand the emerging risks and employ the best practices to minimize fraud.
Advertising fraud is a broad subject with various subsets, each requiring a unique fraud prevention solution. And while impressions and clicks are all common forms of ad fraud, this article mostly focuses on lead generation fraud, otherwise known as “lead fraud.” Additionally, we’ll discuss the strategies and tools you can use to prevent lead fraud and hence, protect your business.
What is ad fraud?
In simple words, ad fraud refers to any attempt to deceive advertisers into assuming that a fake online activity is genuine. This is done through diverse schemes, but they all have one thing in common: getting advertisers to pay for something worthless. Accordingly, ad fraud leads to low marketing performance, poor conversion rates, and sabotaging of future strategies.
More often than not, digital ad fraud is generally orchestrated by competitors or fraudulent publishers, aiming to defame a business or earn huge sums of money.
Types of ad fraud
There are different sorts of advertising fraud across websites and apps, including:
- Click fraud
- Click injection
- Fake app installation
- Click hijacking
- Search ad fraud
- Hidden ads
- Domain spoofing
- Lead generation fraud
Fraudsters are innovative when it comes to bypassing new regulations. They constantly create new ways to gain a profit at the cost of legitimate businesses.
What is lead fraud?
Lead fraud is a type of fraud where a lead provider falsifies the leads’ data in one or more ways and presents them as genuine leads to the buyers. The lucrative aspects of lead acquisition practices have drawn fraudsters to use illegitimate methods to generate fake leads. But that’s not all!
Multiple aspects of the lead generation process can be misrepresented. For instance, they can falsify the information regarding the lead authenticity, site origin, lead age, offer presentation, collected data, and more. Tampering with just one of these elements is enough to affect the value of the leads you purchase and also push you towards breaching the law.
Effects of lead fraud on brands
If you rely on external partners for lead acquisition, you are vulnerable to lead generation fraud. This is because the lead acquisition party that hosts the form has total control, not you, leaving many questionable loopholes in the lead generation process.
It doesn’t matter if you are buying web leads for your outbound sales process or opt-in subscribers for your email newsletter; if someone else hosts the form and sends you the data, you could be the victim of lead fraud.
When buying leads from a provider, the stakes involved with fraudulent leads aren’t just about litigation risks. Bad leads can cripple your marketing efforts in many ways, such as:
- Decreasing ROI: Fake leads are either outdated or completely fake, and often have no interest in the products or services you are offering.
- Destroying brand reputation: Contacting leads who did not consent is intrusive and harms your brand’s reputation.
- Weakening marketing optimization: Bots and fake-user-generated leads contaminate your CRMs and database. Consequently, your marketing and business performance cannot be measured or scaled.
- Wasting your resources: Reaching out to cold leads is both inefficient and time-consuming. Moreover, you are paying large sums of money for high-quality leads that are, in fact, worthless.
Types of lead generation fraud
Advertising is the driving seat of any business. However, the complexity of modern advertising ecosystems provides multiple access points for fraudsters. Accordingly, an unprotected marketing system is well exposed to ad fraud, especially lead generation fraud.
However, you can prevent fake leads from contaminating your marketing technology stack and maintain your focus on genuine leads by understanding a few key concepts: the most reliable anti-lead generation fraud strategies and how to prevent fake leads from entering your database altogether.
First, let’s have a look the most common types of fraudulent lead generation:
Lead Authenticity
Lead authenticity refers to whether or not a lead was created by an interested consumer who filled out a specific request form. It’s common for fraudsters to try and pass off lists as opt-in leads. If a provider can buy cheap lists for pennies per record and pass them off as expensive opt-in internet leads, they can make a lot of money.
Another common variation of this type of misrepresentation is to sell “opt-out” leads as “opt-in” leads. Pre-checking the opt-in box for an offer will greatly increase the number of leads while reducing the quality.
There are many other variations of misrepresenting the authenticity of the lead, but these two examples illustrate the basic problem with unauthenticated leads. So how would you know whether the lead you just received actually completed a form? We’ll get to that in a few paragraphs.
Site Origin
The site URL is the website address where the lead was collected. It’s a critical piece of information because the site controls the consumer experience.
Since the biggest driver in lead quality is the consumer’s intent, you want leads who are genuinely interested in your product or service. Yet, many lead buyers have no idea where their leads originate, which makes them vulnerable to becoming a victim of lead fraud.
Fraudulent lead vendors usually misrepresent the sites where the leads are collected. For example, they might show a buyer a site that looks great but actually buy or generate the leads elsewhere.
Lead Age
The general rule in online lead generation is to contact new leads as quickly as possible. Several published studies demonstrate a simple fact: the quicker the contact, the higher the conversion rate. But what if your lead vendor is providing you with aged leads? If so, these leads are less valuable because they will have a lower conversion rate.
Some vendors sell aged leads at a discount. These leads could pass through a fraudulent middleman and be offered as real-time leads. What’s more, most buyers put daily volume caps on the number of leads they will receive. A lead vendor that hits their cap might simply hold the excess leads they captured until the following day. How would you ever know?
Offer Presentation
Offer presentation refers to what is being shown to the consumer on the form. A common practice to increase form completion rates is to make the offer more attractive to the consumer. There are many approaches to doing this. One way to do this is to minimize or remove the components of the offer that might be perceived as negative by the consumer, such as the cost, required contract terms, legal disclosures, etc. Were your privacy policy and the proper legal disclosures (TCPA) displayed on the form?
Another approach is to offer incentives to the consumer to fill out the form. For instance, they are offered points, discount codes, or a chance to win a sweepstake in return for submitting the form. These leads aren’t really interested in buying in the first place; they are just filling out the form to get the incentive. It’s essential to verify how your offer is presented to the consumer to ensure it meets your requirements.
Collected Data
Collected data refers to the information that is input by the consumer on the form itself. As the lead buyer, you want to receive authentic data as submitted by the consumer. Regardless, this information can be manipulated through lead fraud schemes. According to statistics, the more fields collected on the form, the lower the form completion rates.
For increasing completion rates, fraudsters often minimize the data collected by the consumer and falsify additional data required by the buyer. For example, if your ad collects the consumer’s shopping preference, the lead vendor could leave that field off the form and randomize fake responses. It’d be difficult to spot this type of behavior without knowing what the consumer exactly saw on the form.
How to prevent lead generation fraud?
Awareness is your first step towards anti-fraud lead generation practices. The entire process through which every single lead is acquired must be transparent. Essentially, no traffic channel is secure when it comes to fraud, and this includes organic traffic.
Even if you work with a reputable lead provider, you are still exposed to lead fraud caused by a middleman, or data infringement due to the providers’ poor data security practices. For example, they might source some of their leads from companies that employ some of the above-mentioned fraudulent tactics.
The best protection is to improve transparency and reduce ad fraud by verifying what you are buying. At any given time, you should be able to confirm when and where the leads come from, what was presented to them at the time of acquisition, and how they interacted with the form. This is a complex operation, and losing sight of a single channel can mean risking exposure to lead generation fraud.
ActiveProspect offers a comprehensive solution to safeguard you against all forms of lead generation fraud. We created the concept of independent lead certification so that lead buyers could protect themselves against lead fraud.
How to use TrustedForm Certificates to protect your business?
TrustedForm Certificates help you verify the authenticity of leads’ origins and whether they are genuinely interested consumers. It all comes down to questioning the quality and validity of the leads and understanding the means of strict verification.
TrustedForm Certificates provide you with third-party documentation of consent that is unbiased and complies with regulations such as TCPA, CASL, etc. Ensure that documentation was created by your lead by matching their digital fingerprints to avoid misaligned data. In addition to helping you distinguish between fake vs. genuine leads, this proof of consent protects you in case of legal action.
This practice also allows your marketing team to run campaigns that achieve a higher level of engagement using real-time actionable insights about the leads. Theses insights help you make data-driven marketing decisions by employing behavioral traffic data across all your acquisition channels. Our consent certificates give you a centralized approach to your entire lead management process, from improving traffic quality and low-cost lead acquisition to building excluded audiences and increasing ROI.
Benefits of using TrustedForm for marketers
For a brand, TrustedForm Certificates offer many advantages such as documenting a lead’s origin, complying with up-to-date marketing laws and verifying proof of consumer consent to contact. However, these benefits extend even further when it comes to marketing.
Marketers use real-time bidding to buy the right leads who are genuinely interested in their products or service. More information increases the accuracy of decision-making and improves the leads’ quality. Accordingly, TrustedForm data enables you to make more suitable bids and boost your ROI. Other advantages include:
- Lead age
- Originating domain URL
- Operating system
- suitable geolocation
- Browser
- Device type
- Time spent on form
- Optimizing marketing budget
Above all, we believe consent-based marketing is the best channel for customer acquisition. This way, you can get in touch with customers who truly want to be contacted by your brand while increasing your odds of succeeding in business.
Takeaways
Fraud continues to rise in the marketing environment. Fraudsters are becoming smarter in tackling anti-fraud lead generation practices, so companies must respond with more advanced solutions.
By maintaining TrustedFrom Certificates, you can implement a powerful, real-time technology solution to combat fraud and improve your lead acquisition in all aspects. In summary, you can protect your company while focusing your marketing efforts on leads that actually matter.