Marketing fraud: Businessman holds a white umbrella, protects a dollar bag on basic balance scale, defends money from being cheat or fraud
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In an effort to expand their reach into the right markets, many brands are turning to social media influencers. Brands such as Adobe and Squarespace are making use of micro-influencer marketing particularly, seeking out social media celebrities with relatively small, but targeted audiences.

An in-depth study by MediaKix forecasted that the US marketing sector will spend approximately $1.6 billion on Instagram influencers alone this year. Plus, global influencer expenditure is expected to grow to between $5 billion and $10 billion by 2020. And yet, there’s a glaring problem that’s going under the radar; fake influencers are defrauding some of the world’s largest brands.

Related Article: 8 Tips to Better Influencer Marketing Programs

25 Percent of “Influencers” Implicated in Marketing Fraud

A multi-billion dollar industry is a perfect place for fraudsters to line their pockets illicitly, and according to the London-based Social Chain Group, that’s exactly what’s happening in the influencer marketing industry — and at a far greater scale than anyone imagined. Social Chain scanned 10,000 well-known influencers with their new app Like-Wise, discovered that more than 25 percent of these influencers have participated in false engagement activities. 

According to Social Chain CEO Steve Bartlett, brands such as Unilever, 20th Century Fox, and  Ralph Lauren may have fallen victim to fraudulent influencers. “The list [of defrauded brands] goes on and on and on and on. It's time to clean up our industry,” Bartlett proclaimed via LinkedIn.

How Did Influencer Marketing Fraud Come About?

In an attempt to bolster their social standing and attract brands, rogue influencers are now turning to automated apps and bots to bump up their follower count with fake or even hacked Instagram accounts. Some fraudsters are also paying for temporary post engagement in order to appear more popular than they actually are.

Mackayla Paul, Marketing Manager at Sydney-based Plann, noted that the perks of being an influencer have encouraged many to fast-track their influencer status by taking part in false engagement activities. “[Influencers] receive invites to exclusive launch events and luxurious international press trips. These experiences used to be reserved for editors of luxury magazines and hosts of TV shows — and now? Influencers have become a new source of information that consumers go to for advice. Brands know this and that is why they are putting such big budgets behind influencer marketing campaigns.”

Gil Eyal, CEO, and Co-Founder of Manhattan-based HYPR Brands, added that the introduction of false engagement methods have made it very difficult for “real” influencers to play by the rules. “I like to compare this to the Tour de France. Lance Armstrong said he had to use performance-enhancing drugs because others were using them, he [would not have been able to] compete otherwise,” she said.

“The fact is that there are millions of people working hard to earn a position as an influencer that brands want to work with, and when others in the industry engage in false behavior, it becomes extremely hard to compete. Influencers understand that most brands don’t do their due diligence today, and that people with fake or inactive audiences can get away with it. This creates a terrible incentive [to take part in influencer marketing fraud],” said Eyal.

Related Article: Micro-influencer Marketing: 5 Enterprise Tech Companies Getting It Done

What Does Influencer Marketing Fraud Look Like?

Coming back to Social Chain Group’s study using Like-Wise, they shared an example of a fashion and beauty influencer who engaged in fraudulent activities by charging $1,000 per post. The influencer in question, whose identity has not been revealed for privacy purposes, has over 230,000 followers and has partnered with 22 big name brands including the likes of River Island and TripAdvisor, in 2018. The case study of this influencer revealed that 96 percent of her engagement was fake. “The most common and outrageous form of influencer marketing fraud is generating fake or useless engagement around social media posts in order to gain compensation and stature. Specifically, influencers engage in activities such as paying bot farms for fake engagement that looks organic. This is the worst kind of fraud because it's literally akin to stealing — getting paid for providing counterfeit or worthless product,” Eyal said.

Protecting Your Brand From Influencer Fraud

Earlier this year, Keith Weed, CMO at London-based Unilever stated that their firm has created a new policy where they will no longer work with influencers who buy followers. A number of other companies including L’Oreal, eBay, and Samsung also followed suit. But that said, how can brands know if an influencer is engaging in fraudulent behavior?

One key factor that brands look at before partnering with an influencer is to look at their engagement rate per post, the higher the engagement rate, the better. But with some apps now being able to manufacture this engagement, brands must now need to know the difference between real engagement and fake engagement.

Eyal advised brands that the “easiest” way of differentiating between real and fake engagement is to look through the influencer’s social media profile. “It’s very hard to create fake engagement that is indistinguishable to the human eye from actual engagement. Since fake followership requires automation, the content in the posts is not always spot on, it may be repetitive and the people, or bots, [who are] posting it often have very clear identifiers such as the ratio of following to followers they have, or the empty bio page [and] lack of historical content,”  Eyal explained.

Marrisa Ryan, CMO and Co-Founder of Chicago-based VisualFizz, further added that “marketers can distinguish between real engagement and fake engagement by looking more closely at deeper performance indicators rather than basic, surface-level ones. The number of visitors doesn't tell us a lot about the quality of traffic coming to a brand or website, but metrics like number of new users, bounce rate, pages per visit, and obviously conversion rate can paint a clearer picture of the quality of engagement.”

When we asked Ted Murphy, CEO of Winter Park FL.-based Izea, he advised brands to conduct a thorough background check of the influencer before partnering with them. “The best way to protect your brand from engaging with a fake influencer and from becoming a victim of influencer fraud is to vet and verify influencers before you agree to work with them. What’s the influencer’s story, does he or she have a long history of posting on social media or on a blog or vlog? Or did he or she seeming come from nowhere?”

Murphy also advised brands to make use of influencer marketing platforms. “Using an influencer marketing platform can help [to] understand who an influencer is and where their following came from. For example, an influencer platform will show you how many followers an influencer has, but it will also display how many followers he or she has gained or lost recently. The platform can also show you how well an influencer engages with his or her audience, if at all,” said Murphy. “More importantly, influencer platforms include a verification process. That way you can be sure the influencer posts get published exactly how you wanted them to be. The influencers on the platform don’t get paid unless everything goes according to plan.”