I would just like to share with you a recent fraud attempt we encountered on one of our products made by an affiliate.
The story goes like this:
We have our own affiliate management system (non clickbank/PDC/CLICKSURE etc..) and we have had a new affiliate register to our system a few days ago.
A few hours After registering the affiliate started to produce sales.
Nothing wrong so far.
However, the clickthrough conversion rate for that affiliate was way way above average which was the first red flag.
So , one of our team decided to investigate the customers who registered under that affiliate to see if there is anything unusual.
What he found is that none of the registered customers bothered to log on to our system (we have a login log for each account), this was the second red flag.
We then tried to contact some of these customers by the registered emails only to find out the emails do not exist. This was the final red flag.
So here is what happened.
The person has a list of stolen credit card details,
Since there is no way for him to actually obtain money with stolen credit cards (he can buy stuff online but it's not the same as money in their account) he figured the best way to obtain money is as an affiliate.
Here is how it works:
1.A person holding a list of stolen credit card details registered to our service as an affiliate.
2.That person started to buy our product via his affiliate link using a different credit card every time using bogus email details. Only a few transactions per day in order not to arouse suspicion..
3.Since our payment is once a week, had we not caught on to this fraud on time the commissions would had gone through to him within a week.
4.After a while (a few weeks) the card holders would chargeback the transactions leaving our account without the commissions and with reputation damage (chargeback rates) while the affiliate is long gone with the commission money.
So , my conclusion.
Need to check every new affiliate, especially those that appear out of the blue and start producing daily sales with extremely high clickthrough rates.
Just a friendly warning
The affiliate has been banned, all transactions refunded and we are currently looking on how to track the individual down via the given payment details.