Chargebacks are one of the most damaging forms of affiliate fraud, costing advertisers both the original payout and the reversed transaction. In performance marketing, where rewards are tied to specific actions like sales, leads, or clicks, fraudsters exploit the chargeback process to collect commissions on transactions that are later reversed.
A chargeback is when a customer disputes a transaction with their bank and requests a refund. In the context of performance marketing, chargebacks can occur when a customer disputes a transaction that was attributed to a performance-based action, such as a sale.
How Fraudsters Exploit Chargebacks in Affiliate Programs
Chargeback fraud in affiliate marketing typically follows one of three patterns:
Stolen credit cards. Fraudsters use stolen payment credentials to complete purchases through affiliate links, collect the commission, and disappear before the cardholder disputes the charge. The advertiser loses the product, the commission, and gets hit with chargeback fees.
Bot-generated conversions. Automated traffic inflates sales numbers using synthetic or compromised payment methods. These transactions trigger chargebacks in bulk, often weeks after commissions have already been paid.
Friendly fraud. Real customers make legitimate purchases through affiliate links, then dispute the charges with their bank. In some cases, affiliates coach buyers to file disputes or incentivize purchases with the expectation of a refund, collecting the commission either way.
In all three cases, the advertiser is left covering the cost of the reversed sale, the affiliate commission, and the processor’s chargeback fee, which typically ranges from $15 to $100 per incident.
How to Prevent Chargeback Fraud in Performance Marketing
Chargebacks tied to affiliate fraud are preventable if you catch fraudulent conversions before commissions are paid. Key steps include:
- Score traffic in real time. Use fraud detection tools to evaluate IP risk, device signals, and behavioral patterns on every transaction. Flag high-risk conversions before confirmation pixels fire. Fraudlogix affiliate fraud detection returns real-time risk scores via API to block fraud at the point of conversion.
- Monitor chargeback ratios by affiliate. Track which affiliates are generating the highest chargeback rates. A spike from a single source is almost always fraud, not coincidence.
- Set velocity thresholds. Flag multiple transactions from the same IP address, device fingerprint, or payment method within short time windows. Legitimate buyers don’t convert 50 times in an hour.
- Delay commission payouts. Hold commissions through a review window that extends past the typical chargeback dispute period (30-60 days). This removes the incentive for hit-and-run fraud.
- Verify high-value transactions. For large orders or high-commission conversions, add manual review steps or require additional verification before approving payouts.
For a full overview of how affiliate fraud works and the different forms it takes, see our complete guide to affiliate fraud.
Chargebacks tied to fraud don’t just cost the transaction amount — they also trigger fees from payment processors, damage your merchant reputation, and can lead to account termination. The earlier you catch fraudulent activity in the conversion funnel, the less exposure you have to chargebacks downstream. For a deeper look at how affiliate fraud works and the different forms it takes, see our complete guide to affiliate fraud. To start scoring your traffic for fraud risk in real time, explore Fraudlogix affiliate fraud detection.
