Referral Fraud

Learn how Lootly's anti-fraud system works for referral programs

Ryan avatar
Written by Ryan
Updated over a week ago


Lootly's referral system provides full end-to-end fraud prevention mechanisms to protect our merchants from fraudulent behavior. 

Methods utilized to block referral fraud

Lootly utilizes machine learning to analyze behavior, patterns and velocity for transactions at scale. This allows Lootly to automatically block users from attempting to abuse a referral program. Today there are over 30 different signals that we look out, in order to determine if a customer is real, a bot or something trying to abuse the system. 

These are some of the following high risk indications, that Lootly will automatically block for: 

  • Sender & Receiver email are similar or the same 

  • IP Address Velocity (checking the # of referrals from a particular IP over a period of time & location.) 

  • Customer is not a new customer (has made orders in the past) 

  • Sender attempts to place the order using a referral link 

  • Same cookie session 

  • Potential account cycling (sign up then within X minutes, refer somebody with other high risk indicators). 

A typical block will occur when either one or a combination of factors is taken into consideration. 

Locations where referrals can be blocked

Currently Lootly allows customers to have their own referral link, which in turn can be shared with friends & family. This is the ideal method to drive new customers and growth for an online store. 

When a potential customer clicks the referral link, they are sent to the website and land on a predetermined page (landing page from your settings). If they are a new customer, our widget will display a little box asking them to provide their email address to receive a referral reward. 

  • If the system detects a fraudulent user, it will prevent this box from displaying in the first place. 

  • If the system does not detect a fraudulent user initially, but the potential customer enters in their email address (which is cross-checked throughout the system), and is determined to be fraudulent. Then Lootly will block them at that point, and not generate the coupon code for them. 

Referrals Tip: 

  • We highly recommend to read our best practices guide on how to setup your referrals program. Click here to learn more. 

Tracking blocked referrals

You can now track the referrals that are blocked due to referral fraud. To do this, simply navigate to Referrals -> Activity -> filter by Referral Status and choose Blocked Fraud.

This will show you a list of blocked referrals (with a black status pill showing "blocked" status and a little information tool tip next to it. When you click this, it will open a new window with details on why the referral was blocked.)

Have a question about how we handle referral fraud or need help? 

Feel free to contact our support team at any time, by clicking the Live Chat icon on the bottom right. 

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