You’ll discover the fundamentals of safeguarding your referral programme against fraud in this article.

You will also discover:

about using IT to secure your referral programme.
what the most common referral fraud schemes entail.
Practical advice for preserving your referral bonuses
These suggestions are for you if you plan to run or are presently running a referral programme.

What steps can you take right away to stop referral fraud?

If it’s your responsibility to maintain a healthy balance between the acquisition and attrition rates, you can have some insomnia due to the stress of finding new leads and clients. There are several marketing techniques designed to spread the word about your brand, including paid advertisements, SEO, social media presence, and, you guessed it, happy clients.

Any business may utilise referral marketing to its benefit, provided, of course, that it has a few dozen satisfied customers willing to spread the word. This is the beauty of using referral marketing to your advantage. Hold your horses though; just 1% of customers will try to trick the system out of the 99% who will behave honestly.

This post intends to provide you with a selection of technical and useful referral anti-fraud measures that are ready to be implemented and will prevent your referral programme from failing.

Referral fraud can be prevented in practise by:
Offer non-cash incentives (discounts, gifts, or points on a loyalty card) for each referred client.
Rewards are given for client actions, not just invitations.
Keep an eye on the effectiveness of the referral programme.

Avoid cash rewards and go for points or discounts instead.

Keep in mind that chance makes the thief. If you offer consumers the chance to receive $20 for each user they suggest, you can anticipate that at least a few of them will attempt to profit financially from your referral programme. Financial benefits are undoubtedly the most alluring reward for clients, but they carry too much danger.

Try using discounts or points from gift cards or loyalty programmes as a reward rather than cash. Non-monetary incentives are a better choice because they are less risky and will increase your overall referral ROI by encouraging bonus purchases that are sparked by discounts and free points.

Beware of suspicious user behaviour

You should always make sure that you have monitoring tools in place whether you want to employ SaaS referral providers or design your own software architecture for managing a referral programme. You can react in real-time and directly stop a user from participating in your referral programme if they engage in any questionable behaviour, such as repeatedly failing to redeem the referral code or repeatedly submitting fraudulent email addresses. To ensure that there are no referral abuses under your watch, having logs and a list of events that were recorded in connection with the specified client or referral code will be very helpful.

Limit the use of rewards and referral coupons.

The last (and most crucial) action I’d like you to take is to limit the amount of referral code redemptions. If not, redemptions will be unlimited, which might seriously jeopardise the security of your referral programme, particularly if you don’t have any other fraud prevention measures in place. Limiting the number of redemptions and the duration of your campaign can help you establish a feeling of urgency and may make consumers pick carefully who they share their referral codes with, increasing your chance of obtaining high-quality leads.

Devices with root access and emulators

The usage of emulators and rooted devices is the subject of my final piece of advise. By recognising these devices, you can detect phoney IP addresses that can be used to hide referral fraud and referrals coming from the same individual but from two distinct IP addresses.

All of the aforementioned advice should assist you in spotting prospective fraudsters, but keep in mind that mistakes do happen, so you shouldn’t quickly block people after observing some odd activity on their accounts. What you can do instead is get in touch with them, either manually or automatically, to see if they encountered any issues or perhaps made a mistake while filling in the email address.