Results 1 to 15 of 15
  1. #1
    Newbie
    Join Date
    January 21st, 2006
    Posts
    3
    Criminals killed my affiliate program! Please help!
    I opened an affiliate program for my commercial website in 2000, which I ran and managed myself using the Ultimate Affiliate script. I differentiated my affiliate program by offering nearly instant electronic payouts of commissions using e-gold to all my affiliates.

    At first the affiliate program was a great success. Signups increased tremendously, my legitimate affiliates brought in a lot of new subscriptions and were happy with their nearly instant payouts of commissions.

    But somewhere around 2001-2002 trouble emerged. My affiliate program was discovered by criminals from Vietnam, the Philippines and other third world countries. They started using stolen credit card information to generate lots of signups and then requested their commissions from those fraudulent signups. I was swamped. I no longer knew which signups and commissions were legitimate and which were fraudulent. It also turned out that my chosen credit card processors at the time were unable to screen for fraud (contrary to what they promised when I signed up with them) and were happy to accept all those fraudulent credit card payments.

    As a consequence, I lost thousands of dollars in commissions I paid to criminals, I lost thousands of dollars in chargebacks and fines I later had to pay for all those fraudulent signups my credit card processors were unable to screen for, I lost thousands of dollar for sales that never took place, I lost my accounts with those credit card processors, not to mention all the lost earnings for lots of downtime when I lost my accounts and losing all my legitimate affiliates, when I finally had to close down the affiliate program.

    However, my site and product is still going strong. For a couple of years now it has been accumulating signups and strong sales without any kind of advertising or affiliate referrals at all. I am still being asked by my former and hopeful new affiliates if I have plans to reopen the affiliate program. I would very much like to, since my membership website is excellent and I'm sure the commissions would benefit any potential affiliate.

    But I no longer wish to deal with the head-ache of being overrun by criminals. I understand that the root of the problem may have been my promise of instant payouts in e-gold, but even if I eliminate that, who's to say that criminals still won't use fraudulent signups and then wait for their checks? My current credit card processor has excellent fraud screening, but since I no longer offer the instant payout affiliate program, it hasn't been tested against too many fraudulent signups.

    Neither do I really want to be personally writing out checks. I wish for the affiliate commissions to be somehow distributed automatically by a third party. Unfortunately my current credit card processor does not offer an affiliate program.

    In my mind, this would be my ideal affiliate program. A third-party company - let's call it "Affiliate Master" - deals with everything related to being an affiliate to my site. I direct potential affiliates to Affiliate Master, who then gives them all the data and links to promote my site and hopefully also makes some sort of a background check. I also integrate necessary scripts with the signup systems on my website, so that when a purchase is made, then data is sent to Affiliate Master about what kind of sale was made, who was the referring affiliate and how much is the commission.

    Then I pre-pay Affiliate Master for example $1000, which it then will start distributing to all my affiliates according to what sales they bring to my site minus their own fee. Once the money runs out, I need to send them some more money etc. Also, if a sale results in a chargeback or refund, the data is then sent to Affiliate Master and the affiliate who originally got the commission for it will have his commission deleted for that sale. An affiliate with too many refunds or chargebacks will be deleted immediately.

    I have absolutely no idea though, if such a possibility exists today. Are there programs/companies like that? If so, which ones would you recommend? If there are no such companies, what would you advise me to do? Or where could I find more information about this? I still want to reopen an affiliate program to my site, but I no longer want the associated head-ache.

    Respectfully,

    tonyx

  2. #2
    Resident Genius and Staunch Capitalist Leader's Avatar
    Join Date
    January 18th, 2005
    Location
    Florida
    Posts
    12,817
    In my mind, this would be my ideal affiliate program. A third-party company - let's call it "Affiliate Master" - deals with everything related to being an affiliate to my site. I direct potential affiliates to Affiliate Master, who then gives them all the data and links to promote my site and hopefully also makes some sort of a background check. I also integrate necessary scripts with the signup systems on my website, so that when a purchase is made, then data is sent to Affiliate Master about what kind of sale was made, who was the referring affiliate and how much is the commission.

    Then I pre-pay Affiliate Master for example $1000, which it then will start distributing to all my affiliates according to what sales they bring to my site minus their own fee. Once the money runs out, I need to send them some more money etc. Also, if a sale results in a chargeback or refund, the data is then sent to Affiliate Master and the affiliate who originally got the commission for it will have his commission deleted for that sale.
    The affiliate arena is crawling with solutions like that will do what I quoted (note that I did leave off the closing sentence...I'll get to that part later).
    You have described the major Networks in a nutshell. That's what they all do--it's their main reason for existing!

    Major players: CJ, LS, Performics, and ShareASale.

    They all have benefits and drawbacks which differentiate them from each other, but they all have what you described. What you described in the part I quoted, is their basic functionality... (LS has a few payment options, but the other 3 all handle payments for you as the default).

    Payouts happen every month, but there's a delay which would allow you to get your reversals in. If you normally found fraud happening *after* what would be a normal pay cycle, you'd want to find one that allows you to stall ("extend") another month before finalizing the sale.

    At all networks, sales eventually become finalized. After they're finalized, the bar for reversing (charging back) becomes substantially higher.

    Pricing for their services varies amongst the networks. So does a lot of other things that aren't just "core functionality." Check around ABW for commentary about all of them. Remember that people like to b*tch--so there will be lots of negative commentary compared to positive!

    SAS is the least-complained about of the biggest 4 networks and has the most goodwill. But due to your unique situation with CC fraud, you may want to have the ability to extend transactions out for 60 lonnng days, which they don't offer.

    Perf's sub-forum doesn't have many complaints either, but that's because they don't generate a huge lot of overall attention, period...

    My current credit card processor has excellent fraud screening,
    If that's the case, you probably won't have too many reversals (chargebacks) to put through the network. Transactions that don't "go through" don't cause commissions in the first place.

    An affiliate with too many refunds or chargebacks will be deleted immediately.
    This is NOT basic functionality, so I need to address it further.

    YOU decide which affs to drop, unless they violate the network Terms (in such a way that the network cares). So there is, in effect, no "immediate deletion" thing. Once you decide an aff's presence isn't wanted, YOU hit the Drop Button. Don't count on the network to drop anyone "for you" even in cases of blatant TOS violations. The violations that are ignored by networks usually have to do with promotional methods (search this forum with the keyword "Parasiteware," also check out the Parasiteware sub-forum here), and are beyond the scope of this thread. It's a whole different issue than fraudulant cards, and your basic questions would be lost if the thread diverges into a parasiteware discussion...

    The idea of "too many" chargebacks can be sticky, as it brings up some questions.

    How many chargebacks are "too many?"
    What if the aff just has bad luck, and a couple of crooks come through their link (through no fault on the aff's part)? If you have a fenceable item, crooks will probably try to steal it even if they're not affiliates. And crooks won't go and clear their cookies before ripping someone off, to avoid getting the wrong aff fired! Everybody gets an "invalid credit card" reversal on occasion.

    Remember that the higher an aff's overall volume, the higher the chance that some of the people who found their site are crooks, solely because X amount of the general population is crooked.

    I say those last two, because in the past, some affs have complained that merchants blame them even for what could be called "background radiation." I don't know whether all of these claims are accurate, but I figured I'd mention it just in case.

    I'm sure you'll have more questions, but that's a starter.
    There is no knowledge that is not power. ~Hemingway

  3. #3
    ABW Ambassador Greg Rice's Avatar
    Join Date
    January 18th, 2005
    Location
    Ohio
    Posts
    4,889
    I agree with Leader, having a delayed payment can help reduce the theft and make this type of scam less desirable. Fraudulent orders should be considered in the affiliate's overall performance and not be set to x amount per any period. The weeding out will need to be done manually but your best defense is to create a program that's not attractive to scammers.
    Greg Rice Affiliate Program Management
    www.gocmc.com info(AT)gocmc.com | 330-259-1223

    Join us! - MiNeeds.com | DiscountCandleShop/CheeseSupply | Feng Shui Plaza

  4. #4
    Member
    Join Date
    October 27th, 2005
    Posts
    349
    If doing somthing like this, Id get a real merchant account and have new orders verified by a phone call or the like prior to finalisation. If you for some reason can't get a merchant account of your own, Find out what the charge back period is for your processor...change commission payments to go out after this time period. Also you can set up a system to verify the customer before you grant the order. If the orders are coming in from the PI, or any other place in particular, you can also just check the ips of the incoming to help spot something akin to the Manila Lamer Squad....and use common sense. It's not normal when you offer a world wide product or service to get mass amounts of sales from particular third world countries...they are third world for a reason....being they (as a whole) don't have allot of dough.

    Be realistic and drop wishful thinking. Yes it would be nice if those orders were real, but you have to consider the source. If they can't give you a working phone number that matches the card billing,time to call; then drop it and forget about it.

    Examine each sale. If it's suspect, toss it.

    Why not just extend commissions to a future point in time to help aid in the removal of such? The best stuff I have going takes 3 to 4 months to get paid on. It's not really such a bad deal after the first initial 3 to 4 month wait.

    Fraud skanks are sneaky. If you leave a hole in it, they will find it and exploit it until you correct it.

    ...I noticed you said you paid commissions in e-gold. If there is enough of a demand, why not take payments in e-gold. Then you wont have to worry about chargebacks...unless it is e-gold that you are selling and this wont work for obvious reasons....in as much you will find yourself pretty busy fighting fraud if what you are doing can also be used to launder phishing bounty.

    Examine each sale. If it's suspect, toss it.

    In the stuff I have done with issues akin to yours, I made a simple policy.

    "No card orders from Sub-Saharian Africa, 3rd World Pacific Rim Countries, Any Country that was a part of the former Soviet Union or the Warsaw Pact."

    If they want it bad enough they can pay in egold or send in an international money order...or call to make arrangements.

    I know there are good people from these places, but sadly when it comes to card orders offf the internet from these sources you will find the vast majority bunk.

  5. #5
    Newbie
    Join Date
    January 21st, 2006
    Posts
    3
    thank you for these excellent replies! I will look into the companies mentioned here to see if they can take over the affiliate management side of my business.

    since I sell membership access to an online information product that I've created and that access cannot really be exploited for financial gain in any way (unless you take the whole product and start selling it online yourself), it was my experience that most if not all fraudulent purchases were by fraudulent affiliates themselves trying to "earn" a commission.

    mainly I had two kinds of affiliates. the legitimate ones, who continued giving me business month after month without almost any chargebacks at all and the criminal ones, who seemed legitimate at first but then had ALL of their sales reversed in the following weeks. unfortunately the criminal ones became so prevalent and they kept giving me "business" with stolen credit cards so massively, that I had to shut down the whole affiliate program in order to retain some sort of a credit card processing ability at all (I had already been booted from two PPC companies because of this). consequently of course I lost all my legitimate affiliates as well.

    I will now try to rebuild it from scratch again. thanks for all your encouraging advice!

  6. #6
    AM Navigator Geno Prussakov's Avatar
    Join Date
    May 10th, 2005
    Location
    Washington D.C. Metro Area
    Posts
    11,798
    Quote Originally Posted by tonyx
    mainly I had two kinds of affiliates. the legitimate ones, who continued giving me business month after month without almost any chargebacks at all and the criminal ones, who seemed legitimate at first but then had ALL of their sales reversed in the following weeks. unfortunately the criminal ones became so prevalent and they kept giving me "business" with stolen credit cards so massively, that I had to shut down the whole affiliate program in order to retain some sort of a credit card processing ability at all...
    Tony, does your current credit card processor provide you with the basic AVS-Check at all?

    Geno

  7. #7
    Newbie
    Join Date
    January 21st, 2006
    Posts
    3
    in sharp contrast to my previous two credit card processor, my current processor has very good fraud screening, each transaction is screened by a live fraud specialist and yes, they ask for the 3-4 digit verification code from the credit card (I assume that's what you mean by the AVS-Check?).

  8. #8
    AM Navigator Geno Prussakov's Avatar
    Join Date
    May 10th, 2005
    Location
    Washington D.C. Metro Area
    Posts
    11,798
    Quote Originally Posted by dsteitz
    Examine each sale. If it's suspect, toss it.
    Agreed. Slightest suspection should result in something like this, but I would not dismiss it that easily (as you may loose a good sale). What we do is we send out a message that goes like this:

    --------------------------------------------
    Dear Mr. XXXXX,

    Thank you for your below-quoted order. Unfortunately, it did not pass
    the AVS-check (required for us to charge your credit card safely).
    Kindly call us at 1-877-XXX-XXXX (any time between 7 am and 3 pm EST)
    or fax us some form of an ID containing your home address. Our fax
    number in the US is 1-212-XXX-XXXX.

    We will NOT ship this order until we receive further ID verification
    from you.

    Looking forward to hearing from you soon!

    Best regards,

    Customer Service Assistant's Name
    --------------------------------------------


    Over the period of the last two years, only twice someone actually called back! And that is less than 0.5% of those who placed suspicious sales through.



    Quote Originally Posted by dsteitz
    In the stuff I have done with issues akin to yours, I made a simple policy.

    "No card orders from Sub-Saharian Africa, 3rd World Pacific Rim Countries, Any Country that was a part of the former Soviet Union or the Warsaw Pact."
    (a)
    "Any Country that was a part of the former Soviet Union or the Warsaw Pact" is redundant, as the Soviet Union was a part of the Warsaw Pact.

    (b)
    What's wrong with "the Warsaw Pact" countries?! No, don't get me wrong. I myself am not taking credit card orders from the countries of the former Soviet Union, Albania, Bulgaria and Romania. BUT let me remind you that the Warsaw Pact also included such countries as Czechoslovakia, East Germany, Hungary and Poland, all of which are now fairly successful EU countries (with credit card holders easily verifiable by calling their bank). Are you sure you're not loosing good sales becasue of those three little words in your policy, DSteitz ("the Warsaw Pact")?


    Geno

  9. #9
    AM Navigator Geno Prussakov's Avatar
    Join Date
    May 10th, 2005
    Location
    Washington D.C. Metro Area
    Posts
    11,798
    Quote Originally Posted by tonyx
    in sharp contrast to my previous two credit card processor, my current processor has very good fraud screening, each transaction is screened by a live fraud specialist and yes, they ask for the 3-4 digit verification code from the credit card (I assume that's what you mean by the AVS-Check?).
    No, it's not. It's a card code check you're talking about.

    AVS = Address Verification Service, "a service used in the United States to verify a cardholder's billing address. This service provides fraud prevention for transactions that are completed without a credit card being physically presented (CNP), usually for mail-order, telephone or Internet purchases." [source]

    From my experience it works not only in US and Canada, but in UK, Australia, and a few more countries of the EU. If you get an AVS message that looks like this:

    AVSCode: 8811380088555142:XXGM:500397241283:
    Address: Address comparison not available
    ZipCode: Zipcode comparison not available


    ...and the card code message like this:

    CardCode: Matches cardcode on File

    ...I'd shoot out the e-mail mentioned above to the person that placed the order (to make sure that he/she really is the posessor of the credit card).

    Most of the reputable cc processing companies (if you're opening a merchant account with them) provide merchants with the AVS service. For us, it has proven to be highly valuable.

    Geno

    PS: BTW, welcome to the Forum, Tony!

  10. #10
    general fuq mrbshouse's Avatar
    Join Date
    January 18th, 2005
    Location
    Argieville
    Posts
    1,381
    You might also want to consider where the sales come from regarding the ip range. If you have an affiliate that is sending traffic from one ip addie, they may be filling out the leads themselves and that's something to be concerned about.

    If you have the know how changing an ip addie isn't real hard, but by looking at the range that the order comes from per affiliate it might help you to catch some of the less creative crooks faster.

    Any affiliate that has been thrown out should have some sort of unique identifier that will flag them when they try to come back...and they will. E-gold...how hard is it to set up an account? If this is something that is difficult you may be able to put the account number into some sort of fraud DB.

  11. #11
    AM Navigator Geno Prussakov's Avatar
    Join Date
    May 10th, 2005
    Location
    Washington D.C. Metro Area
    Posts
    11,798
    Any serious credit card processor will also have an option of blacklisting and blocking users by IP, credit card and/or name...

  12. #12
    Member Mitty's Avatar
    Join Date
    December 14th, 2006
    Posts
    93
    In my humble opinion best thing for you would be to drop e-gold.
    Its pretty simple thing to do (lots of alternatives) and it's pretty effective.
    Of course I am newb to affiliate arena but trust me I have been 'probed' by Vienam ,China,India,even Islamic Republic of Iran croocks :-|

    Anyways ,once I stopped rewarding members via e-gold almost all fraud have stopped.
    Good luck

  13. #13
    ABW Founder Haiko de Poel, Jr.'s Avatar
    Join Date
    January 18th, 2005
    Location
    New York
    Posts
    21,609
    Mitty, why in the world are you answering a post from 2006?
    Continued Success,

    Haiko
    The secret of success is constancy of purpose ~ Disraeli

  14. #14
    Member Mitty's Avatar
    Join Date
    December 14th, 2006
    Posts
    93
    Because I came across of this post and I think it's still actual problem with crooks from middle east and asia for programs that use e-gold in conjunction with affiliate program of any kind. I was affected by it for the mentioned above reason . Had to vent

  15. #15
    Affiliate Manager Alan Hamilton's Avatar
    Join Date
    March 13th, 2006
    Location
    Colorado / Florida
    Posts
    4,411
    Hey Mitty,

    Better late than never!! Sometimes it is wise to give a lot of thought to the topic before formulating an in depth answer. You have obviously given a tremendous amount of thought to this one.

    Don't feel too bad Mitt. I'm sure that many of us have responded to an outdated thread before, I know I have. But hey, the bright side of that?? It shows you are obviously researching old threads, and that's a good thing. Now on top of research, you will probably make a point of checking the date of the thread, so learning continues here at ABW.
    Join the Spicy Aprons Affiliate program on ShareASale Visit us on Facebook www.facebook.com/spicyaprons Follow us on Twitter @Spicyaprons

  16. Newsletter Signup

+ Reply to Thread

Similar Threads

  1. Livechat has killed Affiliate Marketing.
    By Aspasa in forum Midnight Cafe'
    Replies: 25
    Last Post: April 11th, 2013, 10:30 PM
  2. Helping the Criminals
    By Kevin in forum Midnight Cafe'
    Replies: 8
    Last Post: April 6th, 2006, 01:44 PM
  3. America's dumbest criminals?
    By Rick K. in forum Virtual Family and Off-Topic
    Replies: 4
    Last Post: December 10th, 2004, 09:03 AM

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •