I’m 3 minutes away from a Saturday but it wouldnt be right without a typical fraud Friday post. This is starting to turn into a bit of work. So far I’ve been invited to two podcasts and 2 speaking sessions covering fraud in the affiliate industry. Who said running your mouth wasnt a good thing?
Affiliate Managers - reading the blog, pay real close attention because I’m only going to explain this once. As a manager it’s pretty damn easy to get that lead report from an advertiser who is claiming fraudulent credit cards and just terminate the affiliate so this educational post may or may not be of any use to you. However, should you read it and comprehend what I am going to say, you may be able to stop these types of publishers BEFORE too much damage is done and costing you a relationship with an advertiser.
Advertisers - Some of you are experienced, some of you are not and some of you are aspiring to run your own offer. Pay attention because when you start messing with your filters on processing their are most likely going to be options for you to use to keep a lot of this out yourself.
Publishers - You might as well pay attention to. Publishers are likely to participate in a lot of internet marketing forums and I can tell you that methods of using “gift cards” have been talked about openly. If you feel like you are being a “rat”, I’ll give you a different perspective to think about. If you know someone is doing this and you dont report it, you are only costing other publishers a possible opportunity to promote the offer, a network’s relationship with an advertiser and quite possibly the advertiser not even utilizing the Pay Per Performance Industry in which…-> We ALL Lose.
Alright so think about this for a moment. Ever seen those $50 Visa Gift Cards at say Walmart? Say you have a publisher cloaking traffic as is the norm in this industry. Unfortunately for the network, it looks like standard encryption or cloaking and the publisher hiding their precious traffic source. Now say you have rebill offers at $3.95 or less. At an average of $3.95 or less and a $50 gift card, a publisher can run 12 leads a day.
Doesnt sound like much right? Let me show you the compounding mindset of a gift card frauder who really has their shit together. Most of you probably wont believe this but the example I am going to show you is a VERY conservative one. After you see the example, imagine a ring of about 50 publishers who are teaching this to outsourced help and compounding the problem.
Monday:
- 1 Publisher
- 5 - $50 gift Cards = 12 leads per gift card @ avg. $3.95 per trial offer.
- 60 leads total today spread across 10 networks = 6 leads per network
- AVG. pay (conservative) $30 payout on each trial offer
- 60x$30 = $1800.00 - $250 for the gift cards - $100 miscellaneous hosting/traffic = $1,450
- At the very least, this publisher is going to make a $1,000 dollar day.
Not a bad day’s work for a frauder right? Volume is low enough that the frauder probably hits each network on 1-3 offers meaning 1-2 possibly 3 leads at the very most per offer. You really think the advertiser is going to pick up that small amount of leads? 99.999% No. Most networks arent even going to pick that up and see that but that is what you as a manager have to train yourself to look for.
Now let me compound this over a month long period and show you REALLY what an organize frauder is capable of. Managers, you are probably going to drop a brick because they most likely make more in a month than you do in a year. Pretty scary huh.
- Publisher has 30 networks
- Publisher hits each network for 12 leads a month across 3-5 offers keeping conversions down.
- Total = 360 leads @ avg of $30.00 per lead = $10,800.00
- Each card holds 12 leads so = 30 cards x $50 = $1,500.00
- Hosting, Garbage Traffic = $1,000 a month (With what I know this is very conservative).
- so $10,800 - $1500 - $1,000 = $8,300 a month.
$8,300.00 a month people. It’s happening out there. Now the scary part is your organized frauder isnt going to have just one account. Oh no, they know there is going to be casualties of war so they are likely to have 3-5 accounts sitting on a network. So if your organized frauder is spreading across multiple offers, staying under the radar on just 3 accounts at the end of the month they could possibly be looking at = $24,900.00
Scary right? It can, it does and it is happening people. It’s so small you probably dont even see it and the advertiser damn sure are going to see it especially since organized frauders do their research and stick to offers that are likely getting volume. Another thing they will do is trace and offer and possibly hit across a few networks.
This is one organized publisher. Multiply that by 100 organized frauders and you can see what we are dealing with in this industry. If you have low volume publishers hitting you like this, I urge you to take a REALLY close look at them. Their names, their information, even call them. Before first payment, have them send you a copy of their license or passport.
But most importantly…
Learn to identify this early on so that you can communicate with the advertiser and have them take those leads away. Shady networks out there. (I dont want to get off on a rant). It pisses me off to see us have an offer that I know is on shit networks that allow these tactics. Most of the advertisers just dont know any better and as networks sometimes the offer is given out to another network that allows this crap. I’ve seen it time and time again. I’ve literally sat an explained it to advertisers time and time again. Whether you care or not, for those who take their businesses seriously in the pay per performance space, it’s in your best interest to start watching stats ALOT closer on low volume for rebill offers.
If you see a new publisher sending these warning flags, start investigating before it costs you a relationship.
15 Comments Received
October 9th, 2009 @10:29 pm
I’ve been contacted a few times by a scammer from China who offered to generate $1k from each network every month at 50/50 profit split. He also revealed he has several ‘well known’ clients and counted a few names from Wickedfire. Lets see where this ends.
October 10th, 2009 @7:58 am
Some big rebill advertisers dont accept giftcards. I think every advertiser should implement that into there merchant filters.
October 10th, 2009 @10:01 am
Wow, that’s a lot of money if you ask me… Truly, GIFT cards they are
OK, if the person referred by a publisher is real, and uses a real card to subscribe. But the card has little funds on it, and after the initial S&H charge, further recurring billing fails. This is also a problem. How advertisers deal with that? How to distinguish a quality lead from a fraud in this situation?
October 10th, 2009 @10:23 am
Another way to combat this is where the advertiser has a call center that calls each order placed to confirm they placed the order also look at the average lifetime customer graphic u can see grouping of fraud leads
October 10th, 2009 @3:23 pm
I thought a lot of CC processors/merchant accounts blocked out gift cards and things like that. I noticed when I was doing all that GPT bullshit in like middle school that a lot of merchants stopped taking prepaid cards.
October 10th, 2009 @3:59 pm
The advertiser is in control of stopping this easier than anyone else in the chain. Their merchant provider/gateway can place a filter on their account to reject transactions from gift cards. If the advertiser is not aware of such a feature, the network should be communicating that to them.
October 10th, 2009 @5:44 pm
A lot of them block, a lot of them dont. If it wasnt such an issue I wouldnt have stayed up late last night writing about it
October 11th, 2009 @12:55 pm
As a small advertiser i am grateful for this type of information and your courage for constantly exposing “stuff” that others know and will not talk about.
October 11th, 2009 @3:03 pm
Gift cards have always been a problem for incentive sites. I would get thousands of dollars of commission revoked per month because advertisers had no precautions set up. I would pay the users 2-3 weeks before the advertiser finally generated a report with the sub-ID’s of who used gift cards too, which made it even more frustrating.
I agree with Binary Factory, advertisers are in the best situation to fight it in most situations because for us, it was nearly impossible to find a solution without collecting the credit card data ourselves. As far as I know, Visa’s and Amex gift cards usually start with the same four numbers…
October 11th, 2009 @6:27 pm
Hey Ruck,
I hate to say it, but this post is too much info for frauders that are looking to start frauding. This is literally a blueprint a frauder could follow to start generating $8k-$24k/month.
October 11th, 2009 @9:32 pm
Better than nothing being said and nah, there’s a whole lot more to it than just grabbing a gift card and filling out offers. I didnt even touch on ip’s, referrers and how to make the quality actually seem like it’s good enough for an advertiser to accept. Those are things I wont put public.
October 13th, 2009 @8:05 am
Is there a way for networks to get CC data from the back-end that can report to you weekly gift card usage per publisher?
If you had this information, it seems to me like it would be easy to shut them down. Not only shut them down but put a little hurt on them.
October 13th, 2009 @8:34 am
No typically the advertiser controls that unless we are hosting/posting the data ourselves and then there might be a possibility. The way to win here is to work closely with advertisers and have them report their subid tracking but being a proactive network and identifying these patterns in early stages. The most important thing is to not allow the element on the network in the first place.
October 15th, 2009 @12:14 pm
Personally I find it hard to believe that that many merchants still aren’t blocking VCC and gift card at this point but Ruck is right in that you stop the fraud at the publisher level by not letting them in the network in the first place.
All it takes is implementing some additional identity verification steps, a solid list of questions that only a real publisher could answer correctly and asking for a couple of references from other networks.
If the networks worked harder at working together on publisher approval, this really wouldn’t be the issue that it is.
And @ Ilya the solution is to preauthorize the customers cards for a larger amount and decline any that don’t approve. I use the same practice in my offers and if a customer doesn’t have a certain amount available they are dumped, there are a few awesome companies that specialize in this as well as lists of undesirable customers known for chargebacks which can also be filtered out.
October 22nd, 2009 @1:22 pm
From what I’ve heard from some merchants, they do not have the ability to distinguish between a gift card and a regular credit card. Nor are they allowed to do a pre-auth on the first rebill. It doesn’t help identify stolen cards either, which is also a big problem in the fraud game.
This whole gift card deal is what pretty much destroyed the incentive side of affiliate marketing. I remember in 06/07 when there was pretty much a dozen new incentive sites popping up per day (thank you Shiftcode) giving fraudsters so many new places to do their dirty work. It peaked quick, then ended. This even bankrupted a few merchants.
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