Clickbank affiliate commisions - Analysis of the problem

14 replies
As I'm now over 50 posts, it's time to write a post for the community, so I've decided to post an analysis.

I noticed in the past months a serious problem with affiliate commissions, especially with Clickbank. Messages show that many affiliates have no clue of the way their commissions get stolen.

My background is almost 40 years in IT. I am not a vendor at Clickbank or Paydotcom but I have extemsively studied both of their systems for possibly selling my coming books. I am an odd affiliate at clickbank who makes about $100 a month. But no commissions in November. Again no commissions in December but I tough it because my business model is not based on Clickbank or adsense, these are just pocket money.

There are THREE ways a commission can be stolen. Let's study them and what can be done about it both on the affiliate side and on the Clickbank/Paydotcom side.

I hope that the information I give here will not give ideas to those who didn't know how to manipulate the system, but I think it is important to explain clearly enough so everyone understands both the problem and its potential solutions - if there is one.

CASE ONE
=======

An affiliate decides to buy thru his own link.

The way to do it.

The affiliate finds a products that is promoted by another affiliate and decides to change the affiliate link for his own to get himself a nice dicount.

He does this on his own browser IE-Firefox by directly typing the link to Clickbank which sets a new cookie.

What can be done?

1- Paydotcom does not credit an affiliate buying thru his own link.
2- Clickbank does nothing.
3- The losing affiliate can do nothing. If the affiliate cloacks his link, the visitor will just follow it, then come back typing a new link of his own affiliate code.
4- The vendor can't do much..

The cloacking systems that I have seen peddled on the web can't do nothing about this as these systems are very easy to defeat.

CASE TWO
========

The visitor decides to get a free product.

He pays for it and asks for a refund before the end of the garantee period.

Paydotcom/Clickbank can't do much
The affiliate and the vendor take their loss.

Nothing can be done when you're dealing with bad faith.

CASE THREE
=========

Someone out there decides to make a million bucks by stealing affiliate commissions.

Here we're not talking about someone stealing ONE commission from ONE affiliate for ONE vendor but MULTIPLE commissions for MULTIPLE affiliates for MULTIPLE vendors.

What affiliates must understand is that the "hackers" who do this usually do not use anything hosted on the web but a small program, a trojan, located on the visitor's PC.

The affiliate is helpless in this situation and here is why.

Let clear the misconception of the way the internet works.

The general understanding is
1- The visitor comes on a web page - OK
2- The visitor clicks on a link - OK
3- The LINK DIRECTLY calls the new server - 50% OK
4- The new page shows - OK

This is approximately what happens but let's see more in detail without getting too technical.

Here is what really happens if there is no trojan on the visitor's PC

1- The visitor comes on a web page
2- The visitor clicks on an affiliate link
3- IE or Firefox reads the link (URL, domain name, web page, parameters)
4- IE or Firefox calls the server who hosts the domain name (clickbank)
5- The server interprets the domain name, the web page and the parameters
6- The server sends the requested web page to IE-Firefox
7- IE-Firefox shows the webpage on the screen

Now here is what happens if there is a trojan on the visitor's PC

1- The visitor comes on a web page
2- The visitor clicks on an affiliate link
3- IE or Firefox reads the link (URL, domain name, web page, parameters)
4- The trojan reads the domain name

5a- The trojan does NOT read the magic word (clickbank)
6a- The trojan does nothing
or
5b- The trojan reads the magic word (clickbank)
6b- The trojan replaces the affiliate code with another affiliate code

7- IE or Firefox calls the server who hosts the domain name (and the new affiliate)
8- The server interprets the domain name, the web page and the parameters
9- The server sends the requested web page to IE-Firefox
10- IE-Firefox shows the webpage on the screen

What can be done about this situation?

Only one thing can be done.
The visitor must remove the trojan from its PC BUT THE VISITOR DOES NOT CARE ABOUT IT...

The affiliate can do nothing on the visitor' PC
Clickbank/paydotcom can do nothing on the visitor' PC
The vendor can do nothing on the visitor' PC

Alhough statistics shows something fishy it's almost impossible to identify who's done it. And to whom exactly.

Clickbank knows how the scam is done. They have guys over there who are much more knowledgeable than I am but they do nothing because they can't do anything.

You may think it's easy to detect the scam but I am going now to tell you how I would do it if I was a hacker and this is very close to what hackers are really doing.

I would write a nice small utility software that everyone loves with dancing bees, fireworks or whatever any visitor not knowledgeable enough to use an antivirus will gladly download because it's free of charge. Then even if the visitor uninstalls the useless software, the trojan will flash "uninstalled" but will stay there...

This trojan would quietly sit in the visitor's PC for some time, doing absolutely nothing and avoiding getting attention at all costs.

Now when the visitor hits a clickbank page, the trojan is activated and switches affiliate codes.

You wonder why clickbank can't find this?

First my trojan contains about 200 clickbank accounts that I have opened under different names and addresses. So if the visitor buys three products during the same day the trojan will rotate affiliate codes and the visitor will randomly buy from three different clickbank affiliate accounts of mine.

Second my trojan is not installed on every PC in the world so clickbank affiliates still get a good chunk of their sales and the clickbank system continues to roll and provides everybody with commissions.

If I am clever enough, each of my clickbank accounts is artificially limited not to exceed a specific amount of commissions, different amount for each account, different amount each month so the Clickbank people have a tough time seeing a pattern and identify my accounts.

After a while I would write a new dancing bees software for the 64-bit PCs and my commissions will keep coming in.

My advice to affiliates is take what clickbank gives you because there is no way you can do anything about it except stopping using clickbank and losing all clickbank commissions.

Who knows how many hackers have clickbank trojans out there... or are busy writing new ones now that they see they won't get caught for a while...

I would be nervous if clickbank was playing an important role in my business model.
#affiliate #analysis #clickbank #commisions #problem
  • Profile picture of the author Christian Sawyer
    Incredible post, very informative.

    This could be the reasoning behind the situation, but why did it just start up recently?

    No one knows the real answer, but we can start throwing ideas, eh?

    -Christian
    {{ DiscussionBoard.errors[404235].message }}
    • Profile picture of the author Paul Myers
      There are other theoretical possibilities.

      Clickbank's system is screwed up. (Could account for everything.)

      A "security" program the user deliberately installed is doing this, in a misguided effort to comabt the profitability of affiliate spamming. (Would account for clickthroughs showing no affiliate ID.)

      An adware program the user deliberately installed did what your trojans are suggested to do, but with the user's "permission," albeit buried in the TOS. (Could account for most observed problematic behavior.)

      Affiliates are misinterpreting things and everything is working fine. (Could account for an undefinable percentage of the observed phenomenon.)

      Any mix of the above, or something we've both missed.

      They could fix the first one on your list, by the way, at least in a way that would work for a lot of incidents. Don't allow a cookie to be overwritten for X hours or days. That could bite the merchants, though, as they'd likely lose those sales entirely. Better just to not let anyone buy through their own affiliate ID.


      Paul
      Signature
      .
      Stop by Paul's Pub - my little hangout on Facebook.

      {{ DiscussionBoard.errors[404281].message }}
      • Profile picture of the author stephabel
        Originally Posted by Paul Myers View Post

        There are other theoretical possibilities.

        Clickbank's system is screwed up. (Could account for everything.)
        Paul
        Paul,

        Thanks for your comment.

        I do not believe that Clickbank's system is screwed up but it's always possible.

        From my experience in IT either a system does work properly or doesn't. If there was a bug causing the problem on such a scale their tech team would have pinpointed it and corrected it long ago.

        Once the techs are aware of exactly what a bug is it's generally a small job to correct it unless there is a major flaw in the system design. The clickbank software has been running for so many years that I think 99% of bugs have been found and corrected.

        Originally Posted by Paul Myers View Post

        An adware program the user deliberately installed did what your trojans are suggested to do, but with the user's "permission," albeit buried in the TOS. (Could account for most observed problematic behavior.)

        [...] Any mix of the above, or something we've both missed.
        Paul
        What I called a "trojan" is a general term.

        I was referring to any virus, adware, malware or any software that acts in a specific way that the owner of a PC is not aware of.
        {{ DiscussionBoard.errors[405537].message }}
        • {{ DiscussionBoard.errors[405588].message }}
          • Profile picture of the author garyv
            This sounds very plausible - and actually 180Solutions and Zango are known for stealing commissions in this very same manner.

            Here is an eye opening link for ya:

            The Effect of 180solutions on Affiliate Commissions and Merchants


            Maybe if Clickbank were to encrypt their hoplinks, it would prevent (or make it more difficult) for these softwares to recognize clickbank links.


            And by the way - people have been dropping ebay cookies for a while. Much easier to steal an ebay commission than it is a clickbank commission.
            {{ DiscussionBoard.errors[405667].message }}
          • Profile picture of the author Kay King
            I remember Commission Junction had a similar problem last year - and quickly moved to identify third party software that was stealing commissions. It was a big deal at the time.

            The CB problem doesn't seem to affect everyone - and CB doesn't admit there might be a problem. So a solution doesn't seem likely for now at least.

            kay
            Signature
            Saving one dog will not change the world - but the world changes forever for that one dog.
            ***
            Vegetarian, an ancient Mohawk Indian word that means "poor hunter"
            {{ DiscussionBoard.errors[405676].message }}
            • Profile picture of the author Paul Myers
              Stephabel,

              As a rule, I'd agree with you on the likelihood of a system having the bugs worked out or being consistent in how they present. The problem with that analysis is that there are so many intervening factors, many of which you listed.

              I tend to think it's a mix of things, including some unquantifiable portion of imagination. The problems are too varied for me to believe it's just one issue. But it's quite likely there's some of the trojan factor at work.

              BTW, I figured that was what you mean by trojan. I only pointed the other out because it's possible that some group of people affected are aware of it (or should be) and just don't care.


              Paul
              Signature
              .
              Stop by Paul's Pub - my little hangout on Facebook.

              {{ DiscussionBoard.errors[405713].message }}
  • Profile picture of the author jrsencio
    Awesome post... its funny you mentioned that because I knew some people who did that and made somewhere between 10 or 20 k in sales in a day but that was through several accounts under false names in different parts of the world.

    Too much risk, too much worry, too little support or intervention from Clickbank... so I guess what this means is for product owners to simply run their own affiliate programs?
    {{ DiscussionBoard.errors[404245].message }}
  • {{ DiscussionBoard.errors[404257].message }}
  • Profile picture of the author Centimetro
    i would guess that someone doing something like this would sooner fry much bigger fish than clickbank, like ebay or something
    {{ DiscussionBoard.errors[404263].message }}
  • Profile picture of the author grumpyjacksa
    eventually, more and more people will just start steering clear of selling CB stuff

    with all the reports of conversions dropping, i do......
    Signature
    Ex-ghostwriter now writing exclusive PLR ebooks - Limited PLR Club
    {{ DiscussionBoard.errors[405586].message }}
  • Profile picture of the author garyv
    I agree w/ Paul that there are also many other factors involved as well. And most people tend to leave out one of the biggest factors, and that is the ever changing Google alogrythm. Many affiliates don't bother to do tracking, so they don't realize that they had a great google position one day and it was gone the next.

    Very important to know where your traffic is coming from - otherwise how can you know it's being stolen?
    {{ DiscussionBoard.errors[405732].message }}
  • Profile picture of the author bearly09
    This is a good post but it kind of confuses me because that's all I know what to do to make money online is to promote from clickbank and paydotcom! I am a newbie but I guess I am still a work in progress you could say lol
    Signature

    Today is your day! See How I Make Money Online

    {{ DiscussionBoard.errors[405900].message }}
    • Profile picture of the author Frank Bruno
      Originally Posted by bearly09 View Post

      This is a good post but it kind of confuses me because that's all I know what to do to make money online is to promote from clickbank and paydotcom! I am a newbie but I guess I am still a work in progress you could say lol
      That's why you need to create your own products as well is not relying on ClickBank as a business model.

      Frank Bruno
      {{ DiscussionBoard.errors[405981].message }}

Trending Topics