Affiliate Program Managers Beware!!
Last week I became the unwitting victim of the latest Internet
scam.
I own and operate 3 affiliate programs and as such am used to
receiving and filing order confirmation emails all day long. I
was noticing a recently registered affiliate (overseas) for
EZineMoney.net was really racking up the sales.
Much to my delight, I emailed to congratulate him on his
success. Next day, four chargebacks in the mail, all
attributable to his sales/reseller site. Two cards, both
charged twice with different Order Names. Then, the phone
started ringing with other people who did NOT order my ebook
that had EZineMoney.net charges on their credit card
statements.
Now, what I should have noticed with each/most of these
orders was the following:
1. Order Name and Name on Card were different.
2. Email addresses of customers were strange and often
similar in nature ie: fmam@famfdma.net, fasdm@fmasdfm.com,
mfa@mfdamfai.com, or, this: juansmithjtiti@yajhin.com. Of
course, these don't exist.
3. None of these customers bothered to register for the
reseller program after ordering. About 75% of real customers
do.
When the fraud hit the fan, I called a well-known competitor
for his advice, and I wasn't two sentences into my explanation
when he stated in no uncertain terms - fraud! He then told me
to watch out for an email from this guy "almost begging" for
his commissions check. No more than half an hour later, that
desperate email graced my inbox! See, this astute marketer
had been hit with this scheme recently.
Now, what makes this all the more ludicrous, is this thieving
reseller was using stolen credit card information JUST to
receive his commissions a month or more later! I mean, how
low-percentage can you get?
Oh silly me, here I was congratulating an active reseller and
he must have been laughing his lyin' derriere off at my
naivety! However, last laugh was on him, as his site was
deleted, and, his HUGE commission check NOT written! Not
surprisingly, when I informed him of the deletion of his site
and the withholding of his commissions, he had the parts to
reply with the following:
"all i can say that is not unfair and i will see a way to get
my rights and my money. Best regards".
Double negative aside,"Best regards" my butt!
The story gets worse though. Shortly after undertaking a
lengthy audit of orders, I came across my good friends friend,
who registered under him of course, and voila!, a ton of
fraudulent orders there. Migraine-bound at this point, I
discover a third and fourth participant!
When all is screamed and done, a LOT of innocent people had
their credit cards charged in my name (they will all be
refunded of course) and my bank account is going to be reduced
by an amount that would make most people's teeth rattle! There
will be endless hours of refunding these innocent cardholders
and adjusting applicable commissions (a notable affiliate
program directory is the innocent sponsor of the first
culprit). Plus, of course, my merchant account is in jeopardy
due to the sheer volume of fraudulent orders and chargebacks.
Valuable lessons learned here folks. I'm quite sure I will be
able to add to this list once I'm all the way through this
dilemma, however, I felt it best to let you in on some good
advice right now:
1. Thoroughly check each credit card order you receive. If you
see irregularities as per what I've listed above, refund the
card right away before they batch. The email address will most
likely be fake and you will not be able to reach the customer
by email.
2. You may want to consider blocking out some countries from
your program. Many third world countries are infamous for
credit card fraud. In this case, the cards were all domestic
but the resellers were from Europe and Asia.
3. If you use Authorize.net you may want to check out their
new FraudScreen.net service. If you use another gateway, check
to see what fraud prevention services they have in place.
4. If you detect fraudulent orders, contact your merchant
account provider right away. They should be willing to work
WITH you on the problem. Remember, you will have a certain
allowance in terms of chargebacks/refunds and you may stand
to lose your account if you reach or exceed that threshold.
5. Lend a sympathetic ear to those victims whose cards were
charged fraudulently. Some, as in my case, will be
understandably angry and although that anger should be
directed at the thieves, they may lash out at you. Act on
their refunds immediately!
6. Once you are sure a reseller is using this scheme, delete
them instantly but make sure to Save all their registration
and commission data before you do so. These documents may be
required in future investigations. I informed each reseller
with this notice:
"We have terminated your website and are withholding
commission payment pending investigation of the fraudulent
orders emanating from your website. Authorities in all
countries involved have been given complete documentation."
This way, in the slight event they are innocent (my guys
certainly weren't), you haven't technically accused them. You
might want to contact your attorney before officially
notifying them.
It's almost inconceivable to me that even the most desperate
thief would resort to buying (or hacking) stolen credit card
information only to use it in such a way as to expect a
financial reward 1-2 months later when there is a better-than-
average chance they will be caught, not paid at all and
reported to applicable authorities. These morons did however,
cause me great grief, which has only just started, and which
you can probably avoid altogether.
Just as I was putting the finishing touches on this article, I
received an email from a friend and fellow affiliate program
manager who was concerned about fraudulent orders and guess
what? She had the same thieving resellers as I had!
Considering that this appears to be a growing problem, it is
my hope that you will take my advice to heart before you
become a victim of The Latest, Not-so-Greatest dotCon Game!
About the Author
Rick is the author of 3 top-selling eBooks at: http://www.interniche.net/ebooks.htm and the purveyor of those amazing traveling billboards called I.D. IT! Plates:
http://www.iditplates.net
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