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Affiliate fraud warning

Posted by Michael Bloch in web marketing (Monday June 29, 2009 )

Affiliate programs are a great way for merchants to mobilize a large sales force with minimum outlay, particularly if the program is handled in-house; however, there are hazards.

Here’s an excerpt of an email I received today from a merchant.

“…regret to inform you that effective immediately we are discontinuing our affiliate program in it’s present form. The main reason we must do this is affiliate fraud. Some affiliates were pushing through orders with stolen credit card numbers. We would then send out payments only to receive chargebacks for the orders months down the road.”

I make a sizeable chunk of my income from participating in affiliate programs and it really disgusts me that this sort of thing is happening in the industry – and seems to be on the increase. It’s tough enough for merchants and affiliates alike with various other challenges without this sort of thing creating an us vs. them feeling.

I’ve also worked as an affiliate manager and in fraud screening and do understand the challenges involved. I’ve seen orders come through that ticked all the right boxes and passed all the tests, yet my gut vibe was they were fraud – and often they were.

The company in question above processes a *lot* of orders, which is likely the reason for the gaps in their fraud screening. For most small merchants with lower sales volumes, it’s not such a problem as it’s much easier to pick up fraud if you’re armed with the correct fraud screening strategies.

While the temptation to let through fishy orders is always there, the costs involved with chargebacks just aren’t worth it – far better to be safe than sorry.

For merchants, any new affiliate suddenly generating a ton of sales needs to be given a second look at. Make contact, get to know the person, but approach it as innocent until proven guilty as super affiliates are hard to come across and one such affiliate can refer more sales than the bulk of the others combined.


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