MBA1135 Q&A Wednesday: How Do I Stop Scammers From Abusing My Affiliate Program?

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Hey O. Welcome to the $100 MBA show where your business gets better every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online and today's episode is a Q and A Wednesday episode. On our Q and A Wednesday episodes, I answer a question from one of you, one of our listeners. If you have a question you want to ask, just email me over@omar100mba.net Today's question comes from Craig and Craig asks how do I stop scammers from abusing my affiliate program? This is a big one, Craig. And those who've run affiliate programs before know exactly what I'm talking about. When you run an affiliate program, you're allowing people to sign up as affiliates to promote your product or service for a commission. So how do scammers get involved? Well, scammers that steal credit card information, they have credit card information from somebody else. They'll sign up as an affiliate buy with the stolen credit card just so they can earn commission on that sale. Crazy, I know. But it's an epidemic with online businesses. So in today's episode I'm going to answer this question and show you how you can reduce some of this scammy activity. There are things you could do in your affiliate program to make sure you don't pay out affiliates that are doing this scammy behavior, how to catch them and make sure they don't continue to do so. I've learned this the hard way, so I want to share it with you so you can go straight to a solution. So let's get into it. Let's get down to business. Scammers, they're a huge headache. We want to make sure we steer clear from them. They could be a huge waste of money. Not only are you going to waste money through a chargeback, so they're using a stolen credit card. So eventually the credit card holder is going to recognize this and charge back that charge and you're going to be out of pocket, plus the fee for a chargeback. But you have also given commission to the affiliate for that fraudulent charge. And sometimes that commission could be hundreds, maybe even thousands of dollars each time. So what do you do? How do you put some rules in place and some procedures to avoid all these headaches? I'm going to start with the easiest one and probably the one that is going to solve most of the problems. Number one is changing your affiliate model. Most affiliate programs offer cash or, you know, monetary reward for a referral. And the reason why it's so popular is because it attracts a lot of affiliates, affiliates like making money by promoting other people's products. We're talking about real, genuine, honest people, not the scammers here, right? They're making money by promoting your products. But you can change the model by not giving cash, but giving credit. Credit to your store, credit to your product to. So, for example, if they refer a customer for a sale of $500, they can get $100 in credit to use for your product or service. This is more of a referral program. Now, this is going to clean up a lot of problems, probably most of the problems, because scammers are not going to sign up for your affiliate program. Sort of a deterrent, because, hey, they want cash, they want to grab the cash and run. They want to get paid as an affiliate before the jig is up, before you find out it's a stolen credit card. Now, this is not an option. If changing your program to a referral program is not an option. Here are some other things you can do to make sure you deter scammers. Look at your affiliate program and your rules. One of the first rules that we put in place after we saw some scammers doing some shady stuff is you need to delay your first payment to an affiliate. So if an affiliate makes a sale and it's the first time they've made a sale and they've earned commission, that commission does not get approved and paid out until an extended period of time. We've extended it to 60 days, but if you'd like, you can extend it to 90 days. Up to you. Why 60 or 90 days? Well, usually the credit card holder that they're using to buy the products within 60 days will recognize the fact that the card is stolen and all these charges are being taken place and you and your payment processor will be alerted. This gives you enough time for the scammers to reveal themselves before you pay them commission. And you only have to do this the first time that affiliate does this. So if they're a legitimate affiliate, which is going to be most of your affiliates, they're just going to have to wait that 60 or 90 day grace period for their first payout. And then subsequent payouts could be at the regular kind of sequence you have, whether it's every 30 days or whatever. But the point here is that you want to make sure that this is a legitimate affiliate. And by delaying that first payout, you allow enough time to pass for, for the fraudulent charge to be flagged. Next, when you're approving affiliate commissions, you have to take a look at the name on the credit card as well as the name on the account as well as the email they use to sign up. If the scammer is going to sign up, they're going to have to verify their email in most cases. So they're going to use an email that they have control over, most likely not the credit card holder's real email address, because hey, they can't get into their inbox and verify it's their account. So usually the email will match the name or the name on their credit card in some way, some fit fashion. You want to make sure it matches the name on the credit card, not the name of the account, because that could be anything. They can just match it to an email that they made up. Now, for the most part, people are using their own name or even their company name along with an email that resembles that name or company name. If not, if the person's email does not match their credit card by name or their company name in some way, you can email that user and say, hey, we take security very seriously. We, we just want to verify that you are indeed a member and that you signed up for this account on this date. The reason why we're doing the spot check is because we notice your email and your name on your credit card is not exactly a match. Your account is totally fine, but we want to make sure everything is cool. Most users will go back and say, yep, all good and you're fine. If not, then you can flag that and know that, hey, this is not a legitimate payment number. Three, what's the third thing you can do? Well, once you find a scammer that has used a stolen credit card, you could flag it in your payment processor. We use Stripe, and Stripe is very intelligent when it comes to this stuff because when you flag it, it helps a whole community of everybody using stripe so they don't get charged with a bad credit card. Stripe will flag, hey, this credit card is stolen is wrong. This is not something that we should accept. And then they find patterns with people's IP addresses that sign up with that, as well as the fact that they sign up with a certain email or a pattern of emails. The point is, is that if you do your due diligence with your payment processor and flag things, it helps the whole community out and helps you in the long run. What's the fourth thing you could do? Pay out your affiliates via PayPal. I'm not a huge fan of PayPal, but they're great when it comes to paying out affiliates. Why? There's some sort of security. If for some reason it doesn't get flagged in 60 days and you know, the person who owns a credit card finds out later it was stolen, maybe they're on vacation or something like that and you've paid that affiliate al commission, they're going to be none the wiser. They're going to think, oh, wow, that's fine, everything's cool, I got paid. But you can report it as fraud and report that this person was committing some sort of illegal activity and get a refund or request a refund from PayPal. Now, it may take some time to get your money back, but that's the whole point of using PayPal is having some sort of safety mechanism for when people do this. Number five, in your affiliate application, when people sign up to become an affiliate, you can have a field that asks them to give their website, the website they use to promote their products that they recommend. If they don't have a site, then there's a good chance they're a scammer. Most affiliates, it's their word that they really rely on. That's how they make all their money, is recommendations A scammer is not going to go through the process of building a reputation in a website and build blog posts and all that kind of stuff. If they're not real affiliate, they're just using a stolen credit card to make some commission so you can cross reference that site that they provide in the application process to make sure they're a real affiliate. If they don't have one, then maybe they're not an affiliate you really need to have Even a personal website is better than nothing.

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Let's wrap up today's Q and A Wednesday's episode A question from Craig how do I stop scammers from abusing my affiliate program? Well, we shared five really good tips that you can use, but I want to give you some advice and this is something I wish I told myself when I first dealt with this issue. This is a part of business. People will abuse things if they have a chance. And it can get incredibly frustrating because you have so much to do in your business. You got so many things on your to do list and you're like, wow, this is a curveball. This is derailing me from what I have to do. I got to deal with these stupid scammers. All that time and energy that I'm putting into to avoid being abused by them. You can really get really angry and get your blood boiling. The best way to look at it is like, hey, this is just a part of the game, part of business. I got to do what I can to protect the business and make sure that we do things right. Don't throw out the baby with the bathwater. You know, there are times where I consider, oh, forget this affiliate program. You know, it's causing me more problems than I want to deal with. Well, it's actually creating a lot of great positive will and it's generating more sales for us. So don't throw the baby out with the bathwater. Solve the issue and move on. Thank you so much for listening to the $100 NBA show. If you have a question you want to ask on Q and A Wednesday, send it to me at omar00mba.net I'd love to answer it right here on the show. Before I go, I want to leave you with this. Believe it or not, things have actually gotten better on the Internet when it comes to scammers over the years. It was the wild, wild west about 10 years ago and this was so much more prevalent. There's so much more security that's being taken place now on the Internet. There's more precautions that businesses have put into place, payment processors have put into place. It's a lot harder now to be a scammer online. But there's always going to be someone who's smart enough to find loopholes and gaps in an infrastructure. So your job as a business owner is to try to fill those gaps as much as possible. And if they still get through those gaps, just deal with them case by case. You always have some sort of repercussion and if they do go through those gaps on a one off, it's okay. Just deal with it and move on. Thank you so much for listening. I'll check you in tomorrow's episode. I'll see you then. Take care.

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