How many bad leads can there really be? You'll be surprised if you're not careful. Early on, I trusted everyone and was burned on more than one occasion. At the contract stage, a CYA approach is necessary. Everyone who has ever done business with me knows that I'm extremely risk-averse when entering into any advertising relationship, especially when running campaigns through the affiliate channel where fraud can happen. With this in mind, a few simple additions to your contract, as well as careful monitoring, will guarantee that you'll only pay for actual leads.

In the contract, make the following specifications:

• You will only pay for valid leads that meet your predefined qualifications. For example, we qualify our leads by stating that they must be U.S. residents, have valid contact information, be non-incentivized and non-duplicate. 
• Specify that you will not pay for any leads that are clearly bogus or that are generated through fraud. 
• Give yourself a short-out clause (24-72 hours) if the campaign isn't working.

So what should you monitor on the front end? It's important that you monitor the IP address of each lead. By monitoring for duplicate IP addresses, we're able to identify clear fraud on the front end on a daily basis. When we see this, we quickly report it to our advertising partner in order to avoid squabbles and conflict later on.

In addition, you'll need to track the final disposition of each lead. While it isn't up to your advertising partners to do the selling for you, it is a publisher's problem if a large percentage of your leads are bogus or have invalid contact information. We consider it normal for 10-15 percent of our leads to have invalid contact information. We chargeback these invalid leads in conjunction with our contract terms. If your invalid/bogus lead rate is higher than 15 percent, then your eyebrows should be raised. It could either be an early sign of the general lead quality or it could mean that you have a fraud issue on your hands.

A little more about affiliate fraud -- I have been using the affiliate channel to market for almost 10 years. In that time, I have seen the most innovative as well as easy-to-catch violators. I take affiliate fraud seriously and consider it theft, plain and simple. Usually, I'll let the affiliate network handle the issue, but several years ago I contacted an affiliate about his activities. He had been moving from computer to computer in the University of Michigan library and entering in two leads on each computer. Thanks to IP tracking, as well as the fact that he put in the same mailing address for each lead, this was really easy to track. A phone call threatening to report this to the dean of students was all it took to never hear from this affiliate again. The rule of thumb here is that there are many dishonest people out there looking for a quick buck, and you need to keep your eye out for it.