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Keep A Close Eye On Membership Sales

by jbsmith
12 replies
One of our membership sites was hit with a fraudulant affiliate scam that went like this...

1. First the scam artist signs up as an affiliate
2. Then he proceeds to generate a few orders each day over a period of a week or two, it would look rather like normal affiliate behavior and the orders looked good - passed the fraud checks of Authnet in my case
3. The problem was that each of these appeared to have been stolen credit card information where orders were placed hoping that he would get his affiliate commission before any signs of trouble
4. Because he was a new affiliate I did not pay out right away and held back for just over 1-month...a policy I now keep with all new affiliates
5. Indeed, I got hit with my first chargeback - tried to contact the credit card owner only to find out the telephone number and email against the order were fake.
6. I immediately terminated the affiliate, refunded all orders credited to him (once checking a few more to see that the telephone and email was also fake) to prevent further chargeback

All of this to say - keep a close eye on new affiliates and keep a close eye on day-to-day sales. I get quite a few members each week so this activity can get lost easily, but with a little review each day, I could have caught this earlier.

They are out there -- your business could be next.

Jeff
#close #eye #membership #sales
  • Profile picture of the author sparrow
    Originally Posted by jbsmith View Post

    One of our membership sites was hit with a fraudulant affiliate scam that went like this...

    1. First the scam artist signs up as an affiliate
    2. Then he proceeds to generate a few orders each day over a period of a week or two, it would look rather like normal affiliate behavior and the orders looked good - passed the fraud checks of Authnet in my case
    3. The problem was that each of these appeared to have been stolen credit card information where orders were placed hoping that he would get his affiliate commission before any signs of trouble
    4. Because he was a new affiliate I did not pay out right away and held back for just over 1-month...a policy I now keep with all new affiliates
    5. Indeed, I got hit with my first chargeback - tried to contact the credit card owner only to find out the telephone number and email against the order were fake.
    6. I immediately terminated the affiliate, refunded all orders credited to him (once checking a few more to see that the telephone and email was also fake) to prevent further chargeback

    All of this to say - keep a close eye on new affiliates and keep a close eye on day-to-day sales. I get quite a few members each week so this activity can get lost easily, but with a little review each day, I could have caught this earlier.

    They are out there -- your business could be next.

    Jeff
    I guess I was not the only one

    it has happened several times, sometimes it is impossible to detect until suspicious activity is spotted by the merchant account holders

    one of the hazards of this trade

    Ed
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  • Profile picture of the author jbandy98
    What would you say are the best methods to avoid this? Just a manual review every day, or are there programs you use for little or no money to help out in this step of the process?
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    • Profile picture of the author jbsmith
      I have had my merchant account processor catch these in the past, in this case, they did not - even when the first chargeback came in, I had to go back and manually look for patterns. Maybe it's time to look for anohter merchant account.

      Manual review would have caught this one had I been looking at each of my orders each day...but I run several businesses online so that wasn't my method of operation until lately.

      Jeff
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      Turn Your Knowledge Into High-Paying Digital Products To Sell Online
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  • Profile picture of the author goneebo
    Wait i run a subscription based site myself via authorize.net...

    basically the card went through to authorize and came back as a fake card? or a legitimate card...but insufficient funds...or when the person saw the transaction they disputed the charge hence you had to pay a charge back fee??

    help me understand this please?
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  • Profile picture of the author Adnimated
    The creditcards were stolen. He tried to extract the money from the stolen creditcards by becoming an affiliate and buying memberships through his own affiliate link. Then the chargebacks came and it became clear it was fake.

    This is a pretty big problem. It's also one of the reasons my affiliates are usually on hold till I approve them.

    Great thread warning your fellow marketers for some of the nasty dangers of this business!
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    • Profile picture of the author jbsmith
      Exactly! The tip-off's were:

      1. Fake phone numbers
      2. Fake email addresses
      3. Subscribers that had not logged in even once - highly unusual as pretty much every new customer has at least a few new logins
      4. Multiple orders within short period of time by the same affiliate - which may not be an indicator in itself if they have done a mass mailing, etc...but should be enough to raise awareness to look at #1-3


      Jeff

      Originally Posted by jkhunter View Post

      The creditcards were stolen. He tried to extract the money from the stolen creditcards by becoming an affiliate and buying memberships through his own affiliate link. Then the chargebacks came and it became clear it was fake.

      This is a pretty big problem. It's also one of the reasons my affiliates are usually on hold till I approve them.

      Great thread warning your fellow marketers for some of the nasty dangers of this business!
      Signature
      Turn Your Knowledge Into High-Paying Digital Products To Sell Online
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      • Profile picture of the author Adnimated
        So I guess next time you get a new affiliate and he sends traffic, you'll immidiately check them out on each of these points.

        I guess another thing to look at is conversion rates (unusually high? could be a tip off. Or very low with massive amounts of hits? could be another indicator.) Or where does the traffic come from? If you get tons of weird countries, it could be proxies.

        Originally Posted by jbsmith View Post

        Exactly! The tip-off's were:

        1. Fake phone numbers
        2. Fake email addresses
        3. Subscribers that had not logged in even once - highly unusual as pretty much every new customer has at least a few new logins
        4. Multiple orders within short period of time by the same affiliate - which may not be an indicator in itself if they have done a mass mailing, etc...but should be enough to raise awareness to look at #1-3


        Jeff
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      • Profile picture of the author goneebo
        doesn't your merchant processor verify that the cards are bogus?

        you get a charge back on bogus cards?

        i am under the impression that my merchant processor verifies the cards in real time
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        • Profile picture of the author Adnimated
          The cards aren't bogus. That's the whole point. It are stolen credit card numbers. So REAL creditcard numbers. As in fraud and pure theft. Which is actually even illegal. It can take weeks before people discover this. And in a bad case, it's even too late.

          Example:

          You go to some shady sales website where they sell a 37 inch Philips Ambilight screen for only $400. You think:

          hmmm... looks good. I want this.

          So you go ahead and pay them.

          Now... you aren't actually making the payment. But these fraudsters take your number... and try to extract the max amount of money from it.

          After they did that, and there's still money left, they may try doing something like this. And if you are unlucky... you won't see that money back, ever again.

          This is a HUGE issue. I've had this problem myself. Where an affiliate tried to pull the same trick on my membership. And then I informed myself about it. To see what I could do against it.

          Anyway... that is what happened probably.

          Hope that explains.

          Originally Posted by goneebo View Post

          doesn't your merchant processor verify that the cards are bogus?

          you get a charge back on bogus cards?

          i am under the impression that my merchant processor verifies the cards in real time
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          • Profile picture of the author goneebo
            The ridiculousness is you get charged back as the merchant. You have no way to know it is a fraud, you can be an honest man selling an honest product but you still loose on the chargeback??


            If the card numbers are valid along with valid info your selling products in fear?


            If theres is a big pattern i understand, but for single instances $25 dollar charge backs on items is WOW
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  • Profile picture of the author Adnimated
    Well... there are certain patterns you can look at. Like where the purchases are coming from. What sort of countries. Look IPs up online and see if there's a site that sells them. Or even gives them away for free. That sort of stuff.

    You just need to be extremely careful. But no need to live in fear. When you discover something like this happening from a specific affiliate... ban him and do what the OP did:

    Refund all purchases immidiately.

    You should be more as ok in that case.

    IF you get a few chargebacks in the process... you just need to swallow it and move on. Because if you're even a half decent marketer... you can make those back within a days time.

    Another thing to battle it is the acceptance process I talked about before.

    Make sure you can trust every single affiliate you accept into your program. Check them out. Even call them up. That sort of stuff.

    Then, when they first start promoting, check everything they do. Make sure their traffic is legit. And if something shady seems to be going on... contact the affiliate first. Make sure you clear things up with him at first. And if it isn't satisfying... move that person out.

    It's basically how big CPA companies work. And apparantly there's a good reason for it.
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  • Profile picture of the author ronaldmd
    I hate scamming method like that. Can't we just make money without scamming?
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