[bedelman]

I recall at least one prior discussion here on ABW of the prospect of users receiving higher prices when arriving at certain merchants' sites through affiliate links. Idea is that merchant has additional costs to pay (affiliate commissions) and passes some of these costs on to the particular users who are associated with such costs.

This raises some serious ethical problems, and perhaps some contractual questions too. I think it will raise some particularly interesting problems in the context of "adware" apps that open affiliate links automatically, which is where I'm ultimately headed with this investigation.

But first things first. Does anyone here remember any thread(s) on this subject? Links? This isn't easy (for me) to find with search -- hard to know quite what words to use to describe the problem.

I beleive I've had this experience with Hotwire, once, but I don't want to jump to conclusions as to what was actually occurring. Hence my desire to begin by investigating what others have previously experienced.

[UncleScooter]

Ben,
I remember seeing this in the LS forum about a travel site, or maybe even an individual hotel site. It was hotel room rates in question.
Hope that helps.

[shelbyprincess]

... when I discovered Miles Kimball advertises clearance prices on affiliate links, but shows the full price when our customers put items in their shopping cart.

Miles Kimball must have gotten clever because now Kimball Klearance doesn't always show on the homepage when a customer uses an affiliate link, but the Kimball Klearance does show on deeper pages - again, with clearance prices showing, full price given if item is put in cart.

If I knew how to get out of their affiliate agreement, I would. That is totally unethical. I simply don't post any of their offers or shop there either.

BTW, the pricing works fine if your hard-key in their website URL.

[Herb ԿԬ]

http://forum.abestweb.com/showthread...ate+hotel+rate

[M_Diddy]

That is just wrong

[bedelman]

Herb, thank you, that is extraordinarily helpful. I knew it was there somewhere.

I will be writing this up sometime soon. Beyond the move to undermine the underlying premise of affiliate marketing, this is also fascinating for the spyware fact pattern.

1) User gets spyware installed on user's computer, say through a security hole (no notice or consent).

2) Spyware sees user go to super8.com.

3) Spyware opens an affiliate link to super8 to try to claim affiliate commissions on any purchase.

4) User pays a higher price than would otherwise have been the case.

Wow! That's an awfully stark demonstration of the harm from a spyware infection.

[Herb ԿԬ]

was that the effect of spyware? I understood the thread to be about a merchant with differing price structures.

[Donuts]

Originally Posted by Herb ԿԬ

I understood the thread to be about a merchant with differing price structures.

Right. But what if it could be shown that a spyware app and a merchant colluded to raise prices. Catch them doing that and the FTC could open an investigation.

I think Ben is just conjecturing here - he's a researcher - he wants to know if this is a suspect area worthy of investigation. So everyone, eyes open - see anything that smells like this ever - send a private message to Ben and then let him go try to catch the tiger.

Ben, not necessarily related to this topic, where can I make a donation to your org?

[bedelman]

Donuts, you're right about why I'm interested. And even if the spyware app and merchant weren't "colluding" to raise prices, it would be enough (to attract interest of so many would-be investigators) to show that the presence of the spyware app (esp. when installed w/o consent) was enough to increase prices.

Last year Haiko (very kindly!) started a thread where some folks were sending me donations by Paypal. ( http://forum.abestweb.com/showthread.php?t=14090 ) But that wasn't something I asked for, and certainly not something I expected. Rather, I generally think of my revenue sources as being companies (i.e. those who seek my assistance in fraud prevention or in otherwise protecting their interests) rather than individuals. I see you posted in that thread just a couple weeks ago, asking whether this is still an "open channel." It's certainly open in the sense that Paypal still operates and still does what it does. But I don't mean to be actively encouraging or soliciting such donations -- ultimately, I don't think I'm much of a charity case...


Ben

[Donuts]

I just made a $100 donation - a contribution - but you are not a charity chase.
Your work supports my goals and my business.
I donate completely out of self-interest.
Hell, I don't even know if I like you - but I love your work.
Consumers, affiliates, merchants all benefit.
Keep it up.

[Kellie aka Ms. B]

I'm curious as to your thoughts as what the contractural issues may be.

An interesting angle connecting this Merchant practice with adware. It's a consumer issue indeed. Let's say for the sake of discussion that there is some type of FTC or consumer protection regulation regarding this type of practice by Merchants and look at the situation from one step back. It seems the core issue is higher prices for consumers when they arrive via an affiliate link. Certainly in the case of an adware application (nonconsentual install) intervening, the consumer ends up unknowingly paying a higher price for a product. But doesn't that hold true if the consumer goes through an affiliate link from aff's web site? They most likely don't even understand or know it is an affiliate link they clicked through. The consumer ends up unknowingly paying a higher price in this case also. Unless the affiliate disclaims on their web site to the consumer they will be paying a higher price (doubtful even if the affiliate realizes that themselves).

How is the consumer likely to feel about this in general towards all affiliate links? Is there potential for more negative consumer perception towards affiliate tracking in general along the same lines as has happened with tracking cookies on whole being labeled as spyware/privacy risk? Can the adware angle be argued effectively while not pulling in affiliate links in general being a risk to consumers for possibly paying higher prices on goods?

Now if there are situations where a Merchant is altering prices for just the traffic originating from software applications...woohoo!

[UncleScooter]

This does indeed add a whole new dimension to the adware issue. I too can see how it might have a serious backlash on the AM industry as a whole.

[bedelman]

Kellie, I agree that this is a sensitive issue. Ultimately it's a problem caused by merchants who change their prices in untransparent ways, leading different consumers to be offered different prices withut clarity to consumers as to the basis of the distinction. But there's definitely the potential for this to reflect badly on affiliates (not just affiliate merchants). That would be unfortunate.

I don't yet know how to present this matter most clearly. And in fact I'm still working on a strong specific example -- a specific "adware" program that leads to the kind of price increase at issue here. Will need a little while to work out the details, make videos, etc.

As to contract: Different merchants' contracts have different provisions, of course. I have yet to find one that is squarely on point. (e.g. no one promises "Customers who purchase through affiliate links will get the same low prices as our other customers" or even "... will have all the same rights as ...") Some come closer than others (some say "any resulting customers are our customers, not affiliate's customers" or some variation thereof). All in all, it certainly doesn't seem like a slam-dunk to me.

[infoscott]

Ben, there are definitely issues relating to price fixing worth exploring here, a la the Robinson-Patman Act. The larger the merchant playing price games with affiliate marketing, the bigger the risk to Robinson-Patman infringement.

When I worked in Pricing for Ingram Micro, this was one of our chief concerns. We were able to get around it usually through negotiated volume purchase agreements to our major accounts.

[Donuts]

Prices are not the same everywhere you go. Varying prices for the same item are legal and common and are allowed as the cost of doing business, with different parties, varies. Plastic cups are cheaper at Walmart than they are at the convenience store. And each may pay a different price for their goods too.

What infoscott mentioned above is described here:
http://www.ftc.gov/bc/compguide/discrim.htm
This is perfectly legal and practiced everywhere, everyday.
And this is the antitrust aspect of pricing issues the FTC will look into - unfair competition - not the case we're chatting about where the price issue is NOT charging less (or conspiring to charge less), but rather charging more.

Let's all get on the same page:
http://www.ftc.gov/bc/compguide/
Start here:
http://www.ftc.gov/bc/compguide/antitrst.htm

I think where the law (and FTC) enters into the possibility of a party over charging is not antitrust, but deceptive pricing:
http://www.ftc.gov/bcp/guides/decptprc.htm

It is against the law to charge more than the advertised price. The FTC will act very swiftly to bust abusers. In addition, most states Attorney Generals also have shared jurisdiction (as they have state laws banning deceptive pricing and price gouging) and should be notified as well. If anyone advertizes one price and then charges more (as we're hypothesizing in this thread), file a consumer complaint with the FTC and your state's AG and they will swing into action. They love to protect the consumer.

Someone above said "when I discovered Miles Kimball advertises clearance prices on affiliate links, but shows the full price when our customers put items in their shopping cart." The links are from the merchant - it's their advertising - affiliates are merely licensed to use their ads. If the merchant charges more than their ads states, bust them.

If (as we hypothesize might be the case) a parasite uses the same creatives we do and somehow charges more than those creatives say, then same deal. Quick bust. If the payment happens at the merchant's cart, then the merchant must have made an agreement with the parasite (again hypothetically speaking) to charge more than the advertised price. In this case, the FTC will crack the parasite and the merchant into tiny little pieces.

Antitrust is unfair competition and is hard to prove because, usually, an agreement between the colluding parties must be proved to exist. BUT, higher prices are not the domain of antitrust usually (save for cartel like behavior where we all conspire to raise the min price we sell at). In this case we're all not conspiring with the parasites and merchants to inflate prices... It's just possible a rogue arm is charging more than the advertised price - think deceptive pricing practices (not antitrust).

Screenshot an ad with one price and a click through to a higher price in the cart and file a consumer complaint with the FTC and your AG. Busted.


And Ben, you can get them on deceptive pricing if we see it - easy to bust when found. Additionally, if you could observe parasites generally raising prices, we could pursue this FTC aspect (see bold):

"The Bureau of Competition of the Federal Trade Commission (FTC) and the Antitrust Division of the U.S. Department of Justice (DOJ) share responsibility for enforcing laws that promote competition in the marketplace. Competition benefits consumers by keeping prices low and the quality of goods and services high.

The FTC is a consumer protection agency with two mandates under the FTC Act: to guard the marketplace from unfair methods of competition, and to prevent unfair or deceptive acts or practices that harm consumers."


I AM NOT A LAWYER. If you even barely think you need one, get one.

[Kellie aka Ms. B]

IANAL is a good practice unless you are one of course.

[Donuts]

Thanks.
Again.

[infoscott]

Charging less is specifically covered under the Act (as you can see in the link cited).

The pertinent part of the legistislation covers large players selling commodity goods and using pricing manipulation to gain unfair advantage in the marketplace. This could include price fixing by oligopolists (collusion), pricing favoritism for customers not based on efficiency, and dumping. IM was never in danger of dumping, being a distributor, but they did have to be careful about price matching with other master distributors and customer favoritism, hence the VPAs.