Bonus/Referral Fraud

A deceptive practice within referral programs where individuals exploit loopholes or manipulate the system to gain unauthorised rewards or bonuses. This can involve creating fake accounts, exhibiting suspicious activity patterns, or inflating referral numbers through artificial means.

Referral programs are a popular marketing strategy to incentivize customer acquisition for businesses globally However, these programs can be vulnerable to bonus/referral fraud, where individuals attempt to exploit the system for illegitimate gains.  

How Bonus/Referral Fraud Works

Fraudsters employ various tactics to exploit referral programs. Here are some common red flags:

• Surge in New Accounts: A sudden influx of new accounts originating from similar sources (e.g., suspicious IP addresses) might indicate fraudulent account creation.

   

• Identical Behavior Patterns: New accounts exhibiting identical behaviour patterns, such as immediate sign-up and referral activity, suggest potential automation or scripting.

   

• Unusually High Referral Numbers: A single account generating an unreasonably high number of referrals compared to others is a cause for concern.

Here's how businesses operating in Africa can combat bonus/referral fraud

• Implement Verification Measures: Employ strong customer onboarding processes with verification steps to prevent fake account creation.

• Monitor Referral Activity: Actively monitor referral activity for suspicious patterns and investigate potential anomalies.

• Set Referral Limits: Establish reasonable limits on the number of referrals an account can generate to prevent abuse.

• Partner with a Trusted IDV Provider: Consider partnering with a reputable digital identity verification (IDV) company that offers solutions to detect suspicious account creation and activity.

Why trust Smile ID as your Digital Identity Verification Partner 

At Smile ID, we understand the challenges of bonus/referral fraud in the African market.  We offer IDV solutions that can help you:

• Advanced Identity Verification: Our solutions leverage advanced technologies to verify user identities during onboarding, making it difficult for fraudsters to create fake accounts.

   

• Risk-Based Authentication: We employ risk-based authentication processes that flag suspicious activity patterns associated with fraudulent referrals.

   

• Fraudulent Network Detection: Our solutions can identify networks of fraudulent accounts linked to bonus/referral abuse attempts.

   

At Smile ID, we have detected over 1.7 million duplicate faces for our customers using, Smile Secure, our proprietary deduplication tool - Digital Identity Fraud in Africa Report 2024