Editor\u2019s Note: We're covering the Affiliate Management Days conference -- and this is the 5th article in the series of our "live" coverage. These articles are on topics of interest to businesses that offer affiliate programs. More coverage of #AMDays. This is live blogging of the morning keynote \u201cNewest Adware & Affiliate Marketing Abuses." Below is coverage from the session featuring speaker Ben Edelman (pictured left), Assistant Professor, Harvard Business School. It's day two at the new Affiliate Marketing Convention, AMDays - a conference created to help affiliate managers and ecommerce merchants better understand how to be successful in the performance based marketing industry. \u00a0Below are my notes from Ben's very interesting session on the issues faced by affiliate managers of the fraud front: Why affiliate marketing? Creativity Reach Attractive pricing model Low risk model Affiliates earn commissions if three things happen: User browses the affiliate's web site User clicks affiliates link to merchant AND User makes a per chase Issues in affiliate marketing: Click Fraud Hidden links / Invisible banners Cookie Stuffing (attaching a tracking code to a user whether they click on the affiliate link or not) How to supervise many small affiliates you've never met Many and divergent incentives: merchant, network, affiliate program manager, affiliate How to retain the cost-effectiveness, excitement, flexibility and passion of affiliate marketing Cookie dropping / cookie stuffing happens in: Forums (which tracks to everyone who visits the post the cookie is dropped in) Websites (hidden code on a landing page that drops a cookie on everyone who visits that page) Mistyped website addresses (i.e.: sears.com vs sea5s.com) Popups (if a popup comes up and you close it right away, that affiliate will still get commission for the sale because the popup hit the customer's computer with a cookie. Popups and cookie dropping happen with a variety of tools such as: Zango MossySky Seekmo nCase ePipo 180 Search Assistant In 2006, an affiliate cheated eBay of $10.5 million in commissions from cookie dropping. This affiliate is now in court in a legal battle over these payouts. Nothing has been settled yet. Supervising affiliates: Penalties, litigation Identify verification (people make up names and addresses to create fake IDs all the time) Some affiliate networks in Europe will now require the affiliate to pay a minimal fee to join (say $1) by credit card so they can verify the legitimate name and billing address of the affiliate. This is to help reduce fraud. Strategies to dealing with these guys: Payment delays Don't pay commissions when you find someone who's been using fraudulent methods Pay a bonus to make good affiliates indifferent (compensate good affiliates for having to wait and focus delays on affiliates who are suspect.) Who has a take in it? Merchant (wants commissions to go down) In house affiliate manager (not clear if they care if they want commission to go up or down. Might depend on their compensation model) Outsourced affiliate manager (want commissions to go up - they generally earn a percent of the sale as well) Affiliate network (want commissions to go up because they also earn up to 30% on affiliate sales) Affiliate (wants the commission to go up, because that's how they get paid) For the next few days there will be more examples, perpetrators and infractions on BenEdelman.org. Be sure to check out your own programs on his site to see how clean your program actually is.