Vendors Watch Out For Affiliate Fraud

by vendor
23 replies
Hello Fellow Vendor Warriors
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.
#affiliate #fraud #vendors #watch
  • Profile picture of the author Cobaki
    I would have already panicked just by recognizing the first sign. It is good that you shared about this. I have never had such kind of experience before but now that I already about this modus operandi, I would definitely be extra careful now, especially because I usually engage in such type of transactions.
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  • Profile picture of the author LimitlessTraffic
    Hrm, has this happen to anyone with a 100% commission WSO product front end?

    It sounds pretty scary and very hard to detect.
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  • Profile picture of the author trader909
    yep..been there
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  • Profile picture of the author BIG Mike
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    • Originally Posted by BIG Mike View Post

      Unless you personally know and trust a given affiliate, you should not be paying them instant commissions. Putting them on 30 or 60 day delayed payments pretty much defeats the fraudsters as they can't access their commissions before being caught.
      I always did wonder why payments get delayed for so long with most affiliate programs now it all makes a lot more sense..
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  • Profile picture of the author Cobaki
    I'm starting to feel interested to know more about the modus operandi of these people. I guess, I am still lucky to have never experienced such kind of things and this is kind of alarming. I hope there are easier ways to detect all of these before transactions with them even start.
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  • Profile picture of the author Matthew Trujillo
    My question is to the guy that stole the credit cards.

    .......How much more stupid could you be?
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  • Profile picture of the author RuthRNM
    Thanks for sharing this.

    I'm in the process of setting up my own affiliate program, and I was Googling this very issue just earlier today. The real stinger is that you're not just giving away the profits of your new product or whatever it is you're marketing - if this happens, you're going to end up paying out of your pocket, and that could be a huge sum if you don't keep an eye on things.

    The only solutions out there are to vet all your affiliates - which is annoying because of course we all want lots of affiliates promoting our products and no one likes to think that they aren't entirely genuine - or offer delayed payments. The delayed payments will put off most of the scammers who are just in it for a quick buck before they get caught - they haven't got the time to wait.

    Hopefully this post will make more people aware. Pleased you were savvy enough to catch it in time before too much damage was done!
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    • Profile picture of the author IM Inc
      Thanks for sharing your experience.
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    • Profile picture of the author BIG Mike
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      • Profile picture of the author Alexa Smith
        This ^^^^ exactly.

        Over and over and over again, we see here in forum conversations the unfortunate results of vendors designing their entire (especially ClickBank) sales process with the prime objective of attracting "as many affiliates as possible". A huge mistake, from the vendor's perspective.

        As any vendor with a really highly-selling, well-converting product on ClickBank will tell you, 95% of his sales typically come from about 5% of his affiliates, and the remainder do almost nothing. What vendors do in trying to attract all those affiliates can sometimes drive away 2 or 3 key affiliates who would actually have sold large numbers. It can be terribly counter-productive.

        What vendors (should) want is the maximum possible number of sales, not the maximum possible number of affiliates. They're two very different things!
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  • Very useful warning. thanks for sharing all that!
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  • Profile picture of the author kencalhn
    Thanks for sharing... it would be good to hear more of these types of affiliate scams, and countermeasures we as vendors can use. Question: using or similar, what country was this fraud affiliate (and orders) from?

    It's because of things like that, that have kept me from using affiliates in my business.. a) fraudulent orders that get paid commissions, then charged back and b) affiliate noncompliance w/spam or ftc-violating promotions.

    I'm going to start off via shareasale, and only accept affiliates from the US/UK/Canada, and make them verify identify w/$1 paypal payment or similar, and can enroll only via domain-email, like so I can verify country of origin; that should help keep out people from high-fraud countries. any other tips?
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  • Profile picture of the author Randall Magwood
    Originally Posted by vendor View Post

    Need to check every new affiliate, especially those that appear out of the blue and start producing daily sales with extremely high clickthrough rates.
    I'm glad that you caught this dude. Besides the above, what else do you plan on doing to prevent this in the future?
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    • Profile picture of the author vendor
      Originally Posted by Randall Magwood View Post

      I'm glad that you caught this dude. Besides the above, what else do you plan on doing to prevent this in the future?
      We are considering to make a change to the pay period
      to 60 days as advised on this thread.
      When it comes to chargebacks though a person can usually
      dispute the charge up to 180 days from the payment date so even this method would not be 100% effective.

      White lists come to mind...
      Show me your site, confirm that it's yours , provide proof your details are real and then you will get approved to the affiliate program.
      But this method is a lot of hassle on our side and may deter legit affiliates making them join our competitors affiliate programs where it's less a hassle for them..
      Many affiliates like to "test" the waters sending traffic to see how it converts and i'm not sure they would bother going through a white list process just to do that.
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  • Profile picture of the author tyronne78
    Hey Randall, all you do is delay payment to your affiliates for 30 to 60 days so they can't access their commissions before they get caught.
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  • Profile picture of the author Terry Ivers
    Thanks for sharing this. I had wondered how affiliates could be bad for you, and this is one very good example. Sorry you went through this experience.

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  • Profile picture of the author kencalhn
    good points about ease-of-use for affiliates... I'm highly risk averse, so I'd rather have fewer affiliates, and less worries, w/more checking them out before approving safeguards.. if anyone has experience w/shareasale (or other managed aff networks) that would be good to know, or other safeguards.

    I'll start by asking colleagues in my industry to join as affiliates, the known people, for cross promos, and do the same for them; to be on the safer side.
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  • Profile picture of the author rmolina88
    Just got hit with my first few cases of affiliate fraud via WarriorPlus today.

    Said affiliate made some sales a few days ago.

    The supposed "buyers" filed paypal claims and I promptly refunded their purchases.

    I investigated the affiliate and the email address he/she used (It's supposedly a female here on the forum, but the paypal address and name is a man's) and banned the affiliate.

    Luckily it was only 2 sales, but it still sucks.
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  • Profile picture of the author SaraHendren
    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

    Thanks! I should totally be more careful.
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  • Profile picture of the author SpicyRobby
    Hi All,

    Just wanted to put in my 5 cents - same thing happened to me, but luckily I spotted it on time - after the first chargeback I realized something dodgy was going on.

    But here's what raised the red flag for me - the bogus affiliates were using CLONE websites to create the impression they were trustworthy partners!

    I mean - from first glance the websites look genuine, only when I looked into them in detail I realized they'd created replica websites of real, reputable blogs and news websites and the only difference was in the domain name - an extra character etc.

    In my case the solution was quite easy - I'm using IdevAffiliate software so I just enabled new affiliate approval, simple as that!


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  • Profile picture of the author webhosting
    Weekly payments sound well to the affiliates, but they are also a magnet for scamers. We call to all our new clients to make sure we have their valid phone number - this is step 1 to minimize the risk of future chargebacks. Step 2 is waiting 3 months before we pay any commission to the affiliates. From my experience it may take more than 60 days before the owner of stolen credit card makes the chargeback, but never it took longer. So if you wait 3 months before paying the commission, you should be safe.
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  • Profile picture of the author STMN
    I am glad you caught this scammer. I hate those type of people. Thanks for sharing your experience.
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  • Profile picture of the author Stefan Shields
    Policing every affiliate may be quite discouraging for some people. I know I don't want to sell for people who don't leave me alone and let me do my thing but it is good to stop scammers like this guy.

    Treat the good guys fine and show no mercy to the bad guys
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