11 Comments

  1. Pothi

    That really sucks for genuine affiliate marketers. I know how famous it is. Just a few days, the print edition was sold out. Let’s wish them good luck. It’s nice of you to keep the link intact.


  2. @donnacha of WordSkill – I take it you’re not a fan of the book or was that all tongue in cheek?

    @Pothi – I’m sure other affiliates have had to go through similar issues, that’s most likely why most use a third party to handle the affiliate stuff instead of doing it on their own.


  3. @Jeffro – Seriously, you took that as a criticism of Jeff and Chris? Or of the book?

    I was joking that this experience – of having to deal with fraudsters – will make them such experts that they could right their next book about dealing with credit card fraud. Admittedly, a pretty weak joke but I presumed it would be obvious, nonetheless, that it was a joke. Apologies to anyone who was offended.

    Perhaps there is a cultural difference in our senses of humor. I’ll try to be more American. (um … that was also a joke).


  4. We did learn some interesting stuff through all of this. I just wrote someone an email about this so I figure I’ll publish it here too, with more detail on our problems and what things could make any affiliate system better.

    —–

    – With E-Junkie there is no approval system. All affiliates are automatically approved. So even if you find a bad guy and delete them, they can just sign up again in immediately and you’d never know. Being able to have some kind of approval system where you can have a quick back and forth with potential affiliates (hi, are you human? where are you going to put your affiliate links?) would be ideal in our case.

    – Delayed payments… It sucks as an affiliate to have to wait months and months to be paid, but that’s the safest way for the person running the program. If you pay at the end of every month, you can pay bad guys before the people with the stolen credit cards even get their statement and notice. The longer you wait to pay the affiliate, the better chance you have of people reporting fraud and canceling the would-be affiliate payment.

    – Synchronization… Even if we started waiting months to pay out, cross referencing the fraudulent transactions and making sure that affiliate gets deleted and not paid for that transaction is still a very manual process. If the second you refunded the PayPal transaction that was done automatically, that would be ideal.


  5. @Chris Coyier – Hmmm, I wonder – do you think some sort of “reverse affiliate” system might actually work better?

    Something along these lines: the website owner lists your digital product for sale and, if one of their users goes ahead and makes a purchase, the website owner / affiliate automatically pays you the wholesale price (say, maybe, 66% of the retail price, which would be $17.82 in your case) from their own PayPal account, but they get $27 from the buyer.

    If the purchase is legit, they’ve just made a profit of $9.18; if it turns out to be fraudulent they gain nothing although you could refund them the wholesale $17.82 (minus transaction fees) if you feel that they were not part of the fraud i.e. if the majority of their sales have been legit.

    At no point in that chain would there be any incentive for the affiliate to engage in fraud because you’re not actually paying them a commission, they would simply be reselling at a profit, like most other businesses in the world. If a stolen credit card is used to buy a pair of Levis in Macy’s, Levis doesn’t take the hit.


  6. Clever, but giving people the right to charge on your behalf is mega scary. For example, they could change the price if they felt like it. That might work for gas stations but I think I’d want tighter control over something as personal as a book.


  7. @Chris Coyier – I hadn’t thought about the price control angle but, I wonder, might that actually give a “free market” boost to sales, with some sites cutting into their own margin in order to move more volume?

    Or, would the variance in pricing blow the lid of the whole affiliate game, making regular people realize that all those “recommendations” have a dollar motive behind them?

    We had legally enforced pricing on books here in the UK, supposedly to protect small bookshops, but all it really did was keep books ridiculously expensive, forcing poorer families to rely upon libraries and second-hand bookshops.

    Minimum pricing was finally dropped in the early Nineties, allowing the Supermarkets to enter the business and massively reducing the price of books overall. If we hadn’t dropped enforced minimum pricing, Amazon.co.uk, with its heavy discounting, would never have been able to operate effectively in the UK.

    The immediate problem for you, however, is that affiliate sales of digital products seem to be unworkable in it’s current form. The reselling approach I’m suggesting could be a fix and, I suppose, there is no reason why minimum pricing couldn’t also be enforced as part of the terms.


  8. I do think it’s a clever idea. For more things to think about though:

    – What about sellers who sell your book but just never pay you? Their customers are happy, they got what they paid for, but then you gotta go fight these non-paying sellers.

    – Is each seller in charge of their own digital delivery? (not trivially easy)


  9. You tokenize each sale, just as e-junkie does, and only email the unique download link to the customer once the affiliate has completed payment, to you, of the wholesale price.

    The automated chain would be:

    1. Customer pays $27 to the affiliate, including his email address.

    2. Upon receipt of the $27, the affiliate automatically pays $17.82 to you, including the buyer’s email address (the system should ensure that the seller cannot simply not perform this step – there can be no problem of insufficient funds because, of course, the sellers PayPal account has just received in excess of the amount he must now forward to you. HOWEVER, in theory, if the seller somehow circumvents the automated system, well, HE has defrauded the customer, it is not legally your problem any more that Guchi is responsible for the guys selling fake Gucci handbags in the backstreets of Palermo).

    3. Upon receipt of the $17.82, the system emails the unique download link to the customer.

    Any later dispute is then the responsibility of the affiliate, removing the incentive for him to make false purchases.

    I know that PayPal has been doing interesting things with their API but I have no idea how much of what I’m proposing might already be baked into their system. Either way, it would clearly remove a major pain point that has seriously disrupted (ended?) your business and, I’m guessing, affected everyone who sells digital products via affiliates (lots of people).

    It’s clearly an opportunity.


  10. @Chris Coyier – Chris how about using Shareasale or other aff market?? This is a huge blow out for people who have been promoting this book …. I know this product doesn’t really need aff. program for promotion, but still who would mind making some extra money by recommending something genuine..

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