The $9,000 Affiliate Fraud Most Shopify Brands Are Paying For (And Don’t Know It)

Steve Hutt:
Welcome back to eCommerce Fastlane. I am your host, Steve Hutt.

Today’s conversation is about a question that I believe is keeping a lot of Shopify merchants up at night:

Is your affiliate program actually making you money, or is it just good at taking credit for sales that were going to happen anyway?

Think about that for a second.

If you’re running an affiliate program and your dashboard is showing, let’s say, $50,000 in sales last month, and you’re paying out $5,000 in commissions on that $50,000, that might look great at first glance.

But what if I told you that only $30,000 of that actually came from customers who were already going to buy? They already had the items in their cart, and all they did was Google for a coupon code right before checking out.

Now you’re paying an extra $3,000 in commissions for revenue you were already going to earn.

I think that’s the problem with most affiliate programs. They’re almost designed to hide that information from you and not reveal what’s really going on.

That’s why I wanted to get my guest on today, Yash Chavan. The name should sound familiar—Yash was on the show last fall to talk about his platform, Saral, which is an influencer OS, an operating system he’s created for running influencer programs. I’ll put a link in the show notes; I think it was episode 427.

He’s back today because he’s built something new called SATHI—spelled S-A-T-H-I—and it’s just launched in the Shopify App Store. It’s really interesting. It’s kind of a companion to your affiliate program and it’s all about cookieless tracking and attribution. I don’t want to dig too much into it myself because I want to hear it directly from Yash.

So once again, welcome back to the show.

Yash Chavan:
Steve, thank you for the amazing intro. Thank you for always having me on to talk about these things. I’m super pumped to dive into it.

Steve Hutt:
Absolutely. We chatted a bit before recording about the Predictable Pyramid for influencer marketing, but since then you’ve launched this entirely new product, SATHI.

Can you talk a bit about what you saw inside Saral that made you say, “We need to build something completely separate to solve this problem”?

Yash Chavan:
Fantastic question.

I think there are two sides to an influencer or affiliate program.

One side is what you touched on: fraud. There tends to be a lot of fraud in affiliate and influencer programs—significantly more than most brands think. That means you’re incentivizing people who aren’t really driving any real sales for you. They’re just capturing sales that would have happened anyway.

So that’s one side—things like coupon sites, fraudulent affiliates placing orders for themselves, affiliates driving click-farm traffic, and so on. That’s the affiliate fraud side.

The other side is almost the opposite problem: brands are not incentivizing the influencers who are truly influencing.

Most affiliate programs rely on cookies and last-touch tracking. That means when five influencers post about you, the last person who posts or drops a coupon code at the right time gets 100% of the credit for the sale. The other four get nothing.

That’s broken.

Eventually, those four people stop posting about you, which means your affiliate program tanks and you stop working with them.

So we realized the measurement infrastructure for affiliates is broken in two ways at the same time:

1. The fraudulent players are getting more commissions than they should.
2. The people doing the real work are not getting the commissions they should.

It’s a double whammy. We had to fix it.

That’s why we decided to create a new platform with this philosophy and core problem in mind, while Saral continues to do influencer marketing, relationship management, and tracking.

SATHI solves for one question and one question only: proving what is incremental in your affiliate program.

Steve Hutt:
Yeah, I was thinking about this whole incrementality concept, because I think people need to understand what that actually means.

If someone says “incrementality,” what does that mean in a way that a brand can understand? Let’s say a brand is doing $100K a month—what’s the difference between an affiliate who’s driving new customers versus one who is just intercepting people already in the checkout flow?

Yash Chavan:
Good question.

In simple terms, incrementality is answering the question: “Would this sale have happened anyway?”

If it had happened anyway, then your marketing spend is not incremental.

If it wouldn’t have happened without your marketing spend, effort, and creative—if those things made the sale happen—then that spend is incremental.

That’s the simple definition.

Now that we have that, an example of a non-incremental affiliate would be someone whose coupon code leaks on a coupon site, or someone who intentionally posts their coupon code on Reddit or Honey to get more usage.

That affiliate is very strategically positioning themselves at the last touch of the funnel, handing out their cookies or discount codes to the browser during checkout, and then getting all the credit.

That’s a non-incremental affiliate.

On the flip side, an incremental affiliate or influencer is someone who creates interesting content about your product, posts it to an Instagram Story, and promotes their affiliate link. The content educates the person, they click the link, and buy.

If that story didn’t exist, they wouldn’t have bought. Because it exists, they do buy.

That affiliate or influencer is incremental.

That’s how I’d think about it.

Steve Hutt:
I see.

What’s interesting with SATHI—from my research—is that you don’t necessarily need to be a Saral customer to get the benefits of SATHI. They’re separate products.

Can you talk about that? I think there was a mindset in building this where you said, “We don’t care what influencer platform or program you’re currently using. If you want to join us over at Saral, great, but the main focus is solving this unique problem.”

So let’s talk about how it can work with any influencer program as a separate entity and how they connect.

Yash Chavan:
Yeah, good question.

The way we think about this is: your influencer program—which may or may not be run on Saral—is the relationship engine. That’s where you find people, contact them, stay in touch, and manage them.

SATHI is the measurement, attribution, and fraud-prevention engine.

SATHI helps you build a robust and fair program that protects you from fraud and protects affiliates from not getting proper attribution. Saral is the relationship engine that helps you find, manage, and reach out to creators.

These two things talk to each other and integrate. So if you’re using Saral, you get the benefits of SATHI as well.

But you don’t have to use Saral. You can just use SATHI to manage your affiliates.

There are a lot of brands that don’t have a formal influencer program but do have an affiliate program. They can still run their affiliates on SATHI.

Steve Hutt:
Yeah, I see that.

I actually tried to install the app on my demo store before recording because I wanted to see it in action. I noticed there’s a survey-based attribution piece, which I think is almost like the human layer that sits on топ of all this.

Can you talk a bit about that? You’re basically asking customers how they heard about the brand.

In practice, how does that change the picture versus click-based tracking alone? What does asking that post-purchase do?

Yash Chavan:
Great question.

A lot of what we’ve built in SATHI is based on realizations about the truth of consumer behavior that we learned while running Saral.

Here’s what actually happens:

People will watch seven influencers post about you over a weekend while they’re scrolling. Then one day, maybe on their commute to work, they remember your brand, search for you on Google, click, and buy.

Attribution will say that sale was driven by organic traffic or Google Search.

But in reality, the demand was created by those seven influencers who talked about you on TikTok or Instagram.

So how do you attribute that? There’s no click and no code, they just buy. But the sale exists because of those influencers.

The demand was created by influencers and captured by organic traffic or Google Ads.

To track demand creation, one of the best ways is first-party attribution: ask the customer where they found you.

In SATHI, with one toggle, you can turn on a post-purchase survey at checkout with pre-built questions. You can edit them if you want, but we have a high-performing template.

Customers can search through your database of affiliates in SATHI and tell you, “Hey, @SteveHutt posted about this,” or “@Yash posted about this.”

They send you that info, and SATHI shows it in a dashboard so you can see the non-click, non-code sales driven by affiliates.

Steve Hutt:
Yeah.

So how do you merge this self-reported data with click data? Is it more about knowing there’s brand reach happening that wasn’t tracked through links?

Obviously you’re not suddenly paying an influencer on every “how did you hear about us” response if there’s no real conversion tracking attached to it. But if, at checkout, the person says “Steve Hutt,” what do brands do with that?

Are they manually giving commission, or is it just informational?

What’s your thinking there?

Yash Chavan:
Good question.

Right now, we’re not enabling brands to use the post-purchase survey as a direct way to compensate creators.

It’s purely a data collection method so brands can understand that there are off-channel, off-link, non-code conversions happening through their influencers.

Some of those influencers might not be the same people who drive clicks.

There’s a type of influencer whose content gets lots of clicks, and another type whose content drives awareness—so people later Google your brand on a weekday commute.

Those are different behaviors.

So the insights from post-purchase surveys are surfaced for now as visibility. We’ll see how this plays out—how open brands are to compensating creators who pop up in post-purchase responses—and then potentially open that up for compensation.

But right now it’s a data collection and reporting method so brands understand there are sales coming from non-attributed sources.

Steve Hutt:
Yeah, that makes sense.

Let’s talk about fraud, because that really caught my attention. You mentioned brands uncovering thousands of dollars in fraudulent commissions that they keep paying.

Without naming names, can you walk me through what this looks like in real life? What types of fraud does your tool catch that others might miss? Any examples or dollar amounts you can share?

Yash Chavan:
Yeah, absolutely.

Before we get into the types of fraud, I’ll share a story that brings this to life.

Last week—Thursday or Friday—we were onboarding a brand. We imported their affiliate program data and saw that one affiliate had driven about $40,000 in sales over the last three months, so Q1 numbers.

Everyone else had driven roughly $1,000 each.

So we’re like, “Who is this superstar affiliate driving all these sales?”

We checked and saw it was a “mom-fluencer” with about 3,000 followers on Instagram.

That didn’t match. Someone with that reach driving that much revenue is suspicious.

Our fraud engine flagged it as an anomaly, given their reach. Then we ran a code-leak scan in SATHI and found that this affiliate’s code—let’s call it JOZI20—was out there on Reddit, Honey, Capital One Shopping, and a bunch of other deal sites.

We caught it, deleted the code, informed the affiliate, and shut that down.

There was around $9,000 in commissions paid out to this one person for effectively not promoting the brand in any real way.

Fraud is a real problem, and there are many types:

• Codes get leaked—either the affiliate leaks them intentionally, or scrapers find and publish them on sites like Honey.
• Coupon injection—browser extensions inject codes at checkout and grab credit.
• Affiliates run paid ads against your branded keywords to an affiliate landing page. You end up paying more for ads because an affiliate is bidding on your keyword, then driving traffic to a page with a better offer—maybe you gave them 20% off, which nobody else gets. They cannibalize your ad revenue while also collecting commissions on sales your Google Ads would have captured.
• Suspicious geo traffic—if you’re incentivizing clicks, affiliates can use click farms to drive lots of low-quality clicks, generate fraudulent orders, and later claim refunds.

There are layers to this.

SATHI has a robust AI fraud engine that keeps track of multiple fraud patterns, catches them, and flags them. Then, in one or two clicks, brands can decide what to do.

For example, “Code JOZI20 has leaked. Do you want to delete the code? Keep the code? Remove commissions?” It’s all handled with a couple of clicks.

Steve Hutt:
Yeah, I see.

Another thing I’m thinking about is affiliate retention.

Most brands overlook this. You talk about affiliate retention and gamification a lot.

Most brands I talk to are on this treadmill of constantly recruiting new affiliates because, like you said, the old ones stop posting.

What are you doing differently on the affiliate experience side? How does that connect to better overall performance?

Yash Chavan:
Yeah, I think one of the big things you should be doing on the affiliate side is gamifying their experience.

You want them working toward milestones.

Commission tiers are great—everyone has those. But what most people don’t have is something like: “When you cross $5,000 in sales, you get a $600 bonus.”

That’s a clear milestone and a compelling reward. People will drive toward that.

Setting this up in SATHI is simple.

You can also set up challenges, like: “If you post three times over the next two weeks about this product—maybe during a sale—we’ll pay you $500.”

You set it up once, and whoever completes the behavior gets automatically tracked and rewarded in SATHI. You don’t have to manually chase anything once it’s configured.

That’s the mechanics of how SATHI does it.

More broadly, creator or affiliate retention is huge. Many brands don’t think long-term about the affiliate experience. They just keep recruiting more people—keep seeding, keep reaching out.

They end up with a bloated affiliate program where most people are inactive.

You want high activation rates.

Gamification helps. So does personalizing landing pages—like adding their name: “Steve Hutt gifted you 20% off.” That goes a long way in keeping affiliates happy and can also improve your site conversion rate.

Those are some of the things you can do to improve creator retention.

Steve Hutt:
Very cool.

Let’s talk about stage-specific guidance. One thing about this show is that we have early-stage, mid-market, and enterprise listeners, and I like to keep things practical.

So let’s say a merchant is doing around $1M a year and running a basic affiliate program with one of the established tools. What should they look at first for their next steps?

Yash Chavan:
If you have any sort of affiliate program, you likely have some degree of fraud you’re overpaying for.

The least you can do is sign up for a free trial of SATHI in the App Store and run a fraud scan. If you have a sizable program, you’re probably paying more in fraudulent commissions than you think.

So number one: do that.

Number two: even if you don’t end up using SATHI, you should look at how many affiliates are truly active.

You might have 45 people in your affiliate program, but only 10 are actually driving traffic or talking about you.

Email the other 35 and say, “Hey, we’re pruning the program. If you’re interested in staying active, reply to this email. If not, we’ll remove you.”

Then delete the inactive ones.

You should be tracking quality metrics like revenue per ambassador. If you have a large program but a low RPA, you just have a lot of noise and your efforts are spread too thin.

Focus on your key affiliates, then scale from that point instead of just trying to scale headcount.

So:

1. Look at fraud.
2. Look at inactive affiliates, purge them, focus on high performers, and then find more people like them.

Steve Hutt:
And I think it’s interesting to re-engage or prune some of these relationships.

You want to incentivize, motivate, and thank the good influencers you have. On the flip side, it’s worth asking the inactive ones, “You used to promote us—who are you promoting now? Are you still doing this?” At least you’re having a dialogue.

Yash Chavan:
Yes, totally.

You’ve got to keep purging every quarter, because there will naturally be inactivity and churn in your affiliate program.

You can set up automations in SATHI to surface inactive affiliates every month or quarter and purge them with a click.

We want brands to build quality programs instead of just scaling meaninglessly and chasing vanity numbers like “We have a thousand affiliates,” when only 70 are doing any real work.

At that point, why do the other 930 exist—just for ego? Remove them.

Steve Hutt:
Yeah, absolutely.

Another theme that comes up a lot on this show is the disconnect between marketing and finance.

A lot of times the CFO has certain mandates from the CEO. Marketing is in its own silo doing its thing.

What’s your thought process around that dynamic? The CMO is trying to defend their budget. CFOs are scrutinizing whether the business is truly profitable.

You’re clearly solving part of this problem. How do we help the marketing side and the financial side speak the same language?

Yash Chavan:
I think historically, influencer marketing has been lumped into “brand”—this untrackable, fuzzy area of marketing where you spend money and hope something happens.

We’re trying to solve that by clearly showing what’s incremental and what’s not.

CFOs like that because they see things like, “Hey, maybe there was no click activity, but some of these influencers are being mentioned in post-purchase surveys.” That’s an interesting signal for a CFO.

Catching fraud is huge too—your CFO isn’t paying $4,000 in commissions to a fraudulent affiliate. That’s a big win.

Marketers and finance folks often have a contentious relationship, but in many ways it’s because the tools are so backward.

The CFO is looking purely at last-click attribution, while the marketer knows their influencer who posted 15 times last week surely moved the needle somehow—but there’s no way to prove it.

The tools we’re building help bridge that gap. With better tooling and better tech, some of these issues can be solved.

Marketers also need to be open to quantifying the impact of brand spend and leveling up their attribution knowledge. They need to understand that last-click is a broken way to attribute influencer spend.

Steve Hutt:
Yeah, it’s interesting.

Marketing leaders could use data from your platform to walk into a budget meeting with a lot more confidence. That’s important.

Very cool.

So what do you see as the next steps? People listening right now know you’re fully launched in the App Store. There’s an audit, free trials, landing pages.

I’ll give you the opportunity to speak to those next steps and who the sweet-spot customer is—where you have enough data behind you that it can be truly measurable and impactful.

Yash Chavan:
Yeah, I actually want to share some news that some of your listeners may or may not have heard.

Instagram has now enabled external linking on Reels.

Steve Hutt:
Yes.

Yash Chavan:
That means influencers can link to their affiliate links directly from Reels, which are some of the highest-reach assets because they can go viral beyond follower count. And unlike Stories, they don’t expire in 24 hours.

They can keep driving traffic and sales.

That’s huge.

With platforms like Instagram doing this—and with more likely coming from Instagram, Facebook, TikTok, and YouTube (which already supports links in descriptions)—affiliate is becoming an even more important channel.

Combine that with rising CFO scrutiny on paid social, and affiliate becomes a channel where you can dictate your ROAS.

Instead of your CFO looking at a fluctuating Facebook ROAS, you can say, “We’re offering a 20% commission, which is a 5x ROAS.” It’s very clear.

If you want that level of control, and the platforms are increasingly supporting it, now is the best time to be running an affiliate program.

Q2 is a great time to run a test.

There’s a free trial of SATHI at mysathi.io—M-Y-S-A-T-H-I dot I-O. I’m sure Steve will leave all the links in the show notes, but that’s our website.

Go there, start a free trial, and check it out. At the very least, run a fraud scan if you have a serious affiliate program and see how much is fraudulent.

If you want to keep using SATHI for better attribution, fraud scanning, and creator retention—the things we talked about—sign up and give it a run.

Steve Hutt:
Yeah, totally.

I’ve seen it all as well. I watched the YouTube walkthrough of the platform. It’s pretty cool when you have real-time performance metrics and a true “home” dashboard for the brand.

It’s neat what you’ve built—very exciting.

Yash Chavan:
Thanks, Steve.

Steve Hutt:
This is awesome.

I’ll make sure everything is in the show notes.

Thanks again for hustling to get this recorded today. I know there’s a lot going on, but this is the sort of thing that needs to get out into the wild.

My big takeaway is: there is a lot of fraud going on right now.

CAC is really high. Acquiring net-new customers is expensive. Knowing that—and wanting to be a more financially prudent, compliant company—it makes sense to make sure you’re paying the right affiliate commissions.

This tool is a big part of that puzzle. The post-purchase attribution is really helpful too. The survey layer is great.

It’s very cool what you’ve built. Kudos to you, and thanks again for recording. Have a great day.

Yash Chavan:
You as well. Thanks for having me on, Steve.

Steve Hutt:
All right, that’s it for today’s episode.

I’d like to thank you personally for being a loyal listener of eCommerce Fastlane. It’s my hope this podcast is giving you a ton of value through growth strategies, tactics, and exclusive insider tips on the best Shopify apps and marketing platforms—all with my personal goal of helping you build, manage, grow, and scale a successful and thriving company powered by Shopify.

Thanks for investing some time today and listening to the show. I’m so proud and excited that you have a growth mindset and are a constant learner.

I truly appreciate you and your entrepreneurial journey.

Enjoy the rest of the week, and keep thriving with Shopify.