In my experience, the best way to limit or fight affiliate fraud is to be preventative.
This means taking lots of time and consideration when processing affiilate applications, and only approving those into the program that you are sure are legitmate - (this doesn't mean that they have to be top quality or high performers by any means). Ask as many questions as possible until you get the answer that you need, in terms of how and where they will be promoting your product, and what methods they will be using to drive traffic. Most importantly, make sure that their details are legitimate. The most common case of fraudulent applications that we see are when affiliates try to claim another site as their own - a quick phone call to the website in question can clear this up very quickly.
It may be time consuming, but I find in the long run it is better to be proactive than reactive.
It's also wise to keep a very close eye on new affiliates in your program especially when they first start sending traffic and have not yet established a solid relationship with you. This way you can nip any fraud in the bud, if necessary.
Cheers,