As long as humans are human, affiliate skimming will be a problem.
The reason it will continue to be a problem is because it’s an easy way for business owners to reduce their marketing costs… and… it’s often hard to detect, even for the affiliates who are being ripped off.
In this article, I’m going to explain what affiliate skimming is, how it works, and a few simple ways to avoid it.
Affiliate Skimming Defined
Affiliate skimming is the practice of intentionally reducing affiliate commissions in order to pay them less than what they have actually earned.
It could be a percentage taken right off the top (like skimming cream off the top of fresh milk) — or it could be something more elaborate, as you’ll see below.
How Affiliate Skimming Works
Skimming affiliate commissions usually works one of three ways:
Method #1: Script Removes or Rotates the Affiliate Tracking Code from the Page that Registers the Sale
Most affiliate programs track referrals through cookies. The process looks like this:
Affiliate link >> Tracking cookie >> Commission registered on post-purchase “thank you” page
Usually, a small piece of code is placed on the final page after a purchase is made. This code checks to see if the sale was referred by an affiliate. If it was, a sale is credited to the affiliate.
Unscrupulous companies may use a script that only displays the tracking code at certain intervals — thereby robbing a certain percentage of affiliates of the commissions they should have rightfully earned.
Jon Hudghton details exactly how this sort of skimming can be perpetrated in this article — Is Affiliate Skimming Still an Issue in 2010?
In the article, Hudghton reveals how he discovered one particular merchant was skimming commissions. Probably the most shocking detail of the story — which most readers may overlook — is that the offending merchant was part of a reputable affiliate network.
This is what most affiliates don’t realize: Even if an affiliate program is part of a reputable affiliate network, they may still be stealing commissions from affiliates.
How is this possible? Hudghton writes:
Due to the nature of affiliate tracking in general, it’s very difficult to spot skimming on a modest scale which puts affiliates in a vastly inferior position when trying to hunt down and deal with any offending merchants.
This is one of the reasons I’ve created the Paid On Time Affiliate Trust Seal. The goal is to centralize affiliate feedback so that good affiliate programs are promoted and bad (or even criminal) affiliate programs are flagged so affiliates can avoid them.
Method #2: Merchant Uses Their Own Affiliate Link to Override Yours
Another form of affiliate skimming involves no special coding skills whatsoever. All it requires is an opt-in form that feeds to an email subscriber list. Here’s how it works…
The merchant sets up an opt-in page to collect prospects’ email addresses. To encourage people to opt-in, they give away some sort of free gift — like a PDF report or an MP3 interview.
Affiliates then promote the free gift that’s available by opting in instead of the product that’s for sale.
The idea behind this type of promotion is that the merchant can increase conversions — and increase your commissions — by using email follow-ups.
So you send your referrals to an opt-in page instead of a sales page. Your referrals get their free gift. Then your referrals receive follow-up emails from the merchant encouraging them to buy.
Now, here’s where the deception happens. When the merchant links back to the sales page and encourages all their new subscribers to buy, they don’t use a naked link straight to the sales page. Rather, they set up an affiliate link — for themselves — and push all the subscribers through THAT link.
Their affiliate link overrides any prior affiliate cookie. So anybody who clicks on the merchant’s affiliate link that’s been placed in the follow-up emails is then credited to the merchant instead of the affiliate who referred the person in the first place.
Method #3: Merchant Reverses Legitimate Sales to Reduce Your Commission
Last but not least, a merchant can “inflate” their refund rate by reversing legitimate sales.
For instance, let’s say a merchant is using a third-party affiliate management system that is NOT integrated with their shopping cart or merchant account.
It would be a simple matter to simply back out a few transactions and claim that the customer requested a refund. Reversing the transaction would have no effect on their shopping cart records… but it would erase an affiliate commission that had been rightfully earned.
Of course, most affiliates would never think to question a refund that reduced their commissions. After all, refunds are a routine part of business. It is not uncommon to “lose” commissions due to legitimate refunds.
How to Avoid Affiliate Programs That Practice Affiliate Skimming
At any given time, there may only be a small percentage of merchants who are actively engaged in affiliate skimming. But even if it is only 5%, it’s only a matter of time before your commissions are stolen from you.
What can do you do to avoid bad affiliate programs?
Here are a few suggestions:
- Avoid programs that have unusually low conversion rates. If you notice that one program consistently converts at less than 1%, then it may be best to move on.
- Avoid programs that have unusually high refund rates. If you notice a higher than normal number of refunds, ask the affiliate manager why. And if you don’t get a satisfactory answer, move on.
- Search for feedback on affiliate programs you’re considering joining. If you find a lot of negative feedback, then steer clear.
- Place test orders — or have a close friend place a test order on your behalf — to verify that commissions are being tracked properly. You may want to do this when you join an affiliate program or only after you’ve noticed that traffic isn’t converting as well as you think it should be.
- Only join affiliate programs that have a good reputation and/or are certified by a third party. The programs who are certified by the Paid On Time affiliate trust seal have a reputation for treating affiliates right and paying them on time. You can browse the affiliate directory here.
Follow these five suggestions and you’ll do a much better job of avoiding the bad affiliate programs out there.
-Ryan M. Healy