I was not aware of Sophos Security Software until a week or two ago.  And I only became aware of it because I found an interesting article on Russian fraud rings operating under the “Canadian Pharmacy” banner.

The owner of this software, is a guy by the name of  Dmitry Samosseiko.  He apparently spoke at a conference on Computer Virus’ in Geneva in Sept. 2009 and his speech was all about Internet Fraud, particularly by the Partnerka.

The Partnerka is a collection of hundreds, possibly thousands, of well organized affiliate networks that operate mainly from Russia, but also in other parts of the world as well.  I say affiliate networks, because at the heart of what they do, these “webmasters” promote false anti-spyware software, fake pills, fake dating, fake watches; almost every vertical has some level of these folks involved.

Fake in the sense that the end customer buying the product has no idea that it does nothing for their computer or them, and that these thieves are interested only in their credit card information, and not in creating a long term customer relationship.  The “webmasters” (read: affiliates) get paid for driving traffic to these false product sites and encouraging the traffic to purchase.

But what happens when the fraud starts to get out of hand, and spills over into legitimate products and services. The kind affiliate and CPA networks promote.  How does their plan work then?  Read Dmitry’s report to get the inside scoop and how you can prevent being one of those who has been taken.

Here is the Link to the Partnerka report.

Cool Tip of the Week:

When paying affiliates, look at the cashed checks through your bank’s electronic checks feature.  If you notice lots of unconnected affiliates all having the same endorser and the checks are being sent offshore, you might be the victim of a fraud ring.

If You Promote Non-Compliant Campaigns – You Could Be The One Hauled Into Court

Recently, a disturbing development has shaken the already unstable footing of the online Publisher (or do you say Affiliate). The Attorney General (AG) for the State of Illinois, Lisa Madigan has, “filed consumer fraud lawsuits against three suppliers and a local affiliate marketer of acai berry products charging that the companies lure customers with free trial offers – through aggressive Internet marketing techniques – and then charge customers’ credit cards prematurely, do not always supply the product and make it nearly impossible to cancel.”

This is a significant change and most surely will be the harbinger of things to come.  In the suit, the AG coordinated efforts with Harpo, Inc., producers of “The Oprah Winfrey Show” and “The Dr. Oz Show” both of whom had their likeness infringed upon by the owners of the campaign, Advanced Wellness Research.  In a separate but related action, Harpo has filed suit against AWR and almost 50 other suppliers and their associated agencies for trademark infringement for using Oprah and Dr. Oz’s name and likeness in their campaign materials.

The action of the Illinois AG sends a clear message to not only the Health sector, but to all links in the Performance Marketing chain – make sure what you are promoting is compliant and not deceiving the public in any way.  The Publisher is identified in the suit as Amirouche & Norton, LLC, who are being asked to pay a civil penalty of $50,000.00, and an additional penalty of $50,000.00 per violation of the Consumer Fraud and Deceptive Business Practices Act (where the court finds that the Defendant committed with intent to defraud), as well as an additional $50,000.00 per violation of the same Act as above, but this fine relates to only those instances when the consumer was over the age of 65. It also seeks to bar Amirouche & Norton, LLC from promoting health products ever again.

Pretty steep penalties, just for running a Risk Free Trial offer for Acai Berry.  Doesn’t seem very Risk Free to me.

The Complaint outlines very specifically what the infractions are against the Publisher, these include:

• Using Flogs like Beckysweightloss.com (removed) to mislead consumers about the product benefits.
• Use of celebrities images and names who are not spokesperson’s for the campaign, and misleading consumers into thinking these celebrities endorse the products.
• Failure to disclose the terms and conditions of a “free trial offer” in a place that is clear and conspicuous to the consumer.

The point here is simple: Think BEFORE you Promote.  If you cannot clearly understand the terms of the offer, or it seems deceptive in any way, you may want to replace that campaign with something more compliant.  If a campaign uses a celebrity image, steer clear unless it says specifically that the celebrity is a paid spokesperson and the Advertiser has the paperwork to prove it.  And lastly, the use of “fake blogs” or flogs as the Complaint calls them is never a good idea.  Even if you are selling statues of the Virgin Mary, faking testimonials or making up stories about the product and it’s benefits will only cut your career short in Online Marketing.

In a world where Subway(TM) is being made to rethink their marketing because their super weight loss spokesperson Jared is perceived as promoting submarine sandwiches as a diet plan, it is always best to take the high road.

Story Links:
- Illinois Atty General’s Press Release
- Complaint filed against Publishers, Amirouche and Norton, LLC
- Federal Trade Commission
- Tips on How To Judge if an Offer is Compliant

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Over the past 12 years I have seen a lot of things change on the Internet. A Lot.
And if you believe in leprechauns and imaginary pots of gold, well there is a whole section waiting for you in West Las Vegas. Because I have seen my share of flame outs and f-ups to last me a lifetime. But I also have to temper the George Parker in me, with knowing when a truly good idea comes along. CPA Networks are actually a model that once it gets the bugs out, really works well. And not just for the players who are established, but newer players as well as more budgets get rolled into Internet Marketing.

Performance marketing online takes many forms, but one thing is true for every player in the game:
when it hits it hits big for everyone involved. Advertisers get quality sales/leads and pay only when a sale is made. No more guessing. Publishers get nice big commission checks and a steady stream of trusted campaigns that consistently convert. Networks gain when both sides of the equation benefit from their involvement, not only monetarily, but also in building their brand as the next generation of ad agencies.

Performance, or Affiliate Marketing, uses all of the media channels available to generate
traffic. Paid Search, CPM, Social Media tactics, Mobile and a host of other traffic driving techniques to generate quality sales. In theory it should all work perfectly. Publishers drive highly targeted and, at least in theory, qualified traffic, unless of course it is just unabashed incentivized traffic, in which
case the Advertiser or network owning the property is more than likely monetizing the bejessus out of it.

So you have Publishers creating millions of clicks of traffic everyday, and the Networks are
administrating everything through DirectTrack or another tracking platform solution (or an in-house roll your own) so the Advertisers payments get distributed to the Publishers and the Network watches the gate for fraud. And hopefully the Advertiser knows what to do in this channel before they give it to an ad agency, or at the very least their agency has someone who has a clue or worked at a Network on staff to explain it to them.

When Jason Wolfe created DirectTrack as well as KeyWord Max and The Affiliate Cross Pub Network, he then allowed any Advertiser that had an offer and affiliates, either in-house or on CJ or Linkshare or any other online affiliate management services, now could become their own mini-CJ (the leader at the time and probably still is for all I know). Whatever Jason is up to these days, you may want to watch him. He’s smart.

For those of us who have done this for over a decade, this is not news. But what is news, is that no one has ever really documented what Jason’s original idea has morphed into. If Fortune 500 brands and their agencies took a harder look, as some have done, at the Cost Per Action model for distribution, more than a few might see how engaging actual users of their products, when done right, returns better than most CPM campaigns and can scale to withering heights, once again, if managed correctly.

This is where the networks come in. In order for any Advertiser to win in this game, they need to monetize all post “action” activities from the sale or the lead generated. If Networks were more proactive in both the campaign development and creatives, as well as strategies that employ the strengths of the channel and do not play to it’s blind spots and weaknesses.

This report attempts to capsulize my 12 years of online marketing experience as filtered through the last 11 months. In that time I helped to build, with a very talented team might I add, The Offeratti Network. I have as of this date, become un-enjoined with the company but continue to know that the strong foundation I helped to build will be successful far into the future. They are good people.

The State of CPA – A Report Covering CPA Network Distribution Trends for Advertisers, Networks and Publishers.

I know, long a** name, so what. It describes what the 28 pages (only 2 pics, sorry for you skimmers), contains and an honest no BS approach that has always been the way I approach this business. Something I learned in the early days of the dark side of the “industry”, was very simple: Traffic talks, BS walks. The numbers, particularly Advertiser ROI numbers, dictate everything in the Performance Marketing channel. Not EPC, Not eCPM (they have their place at the table for sure), but these can all be skewed by simply paying more. But the 1 in X Factor (raw page conversion) is where the actual wins are scored. It is the only leverage an Advertiser has.

>So I wrote this report in like 4 days, because it has been sitting in my head for a couple of years. My experience has allowed me to have access to the highest levels of current CPA Network heads, as well as the Affiliate Manager levels (where the action is on the street) and everyone in between. I have listened, and I have asked the tough questions that have led to my conclusions. I have dealt with the various levels of consistency and inconsistency in how these top networks conduct their business.
My in-depth discussions with these leaders of the CPA channel all share a common vision of
where they want to see this advertising channel be, and where it is today, and WHAT IS NEEDED TO FIX IT! Networks need to stay ahead of the curve and I have uncovered several guideposts everyone agrees on that will move our segment of online advertising to the next level.

Read My State of CPA Report

By simply filling out the form below you will receive sent weekly insights,
reviews and news of what is working in the CPA Channel and what isn’t.

Sign up below.

Recently, I received a stellar letter from Azoogle Ad Network (AZN) regarding their stance on the current state of litigation occurring on our industry. Here is an excerpt:

�The Illinois State Attorney General�s Office, Oprah Winfrey, and Dr. Oz have filed a number of suits in the past day which may affect your business. The lawsuits send a clear message that using deceptive ad content, e.g., fake celebrity endorsements, not disclosing the price and re-bill terms, using fake blogs, etc., will not be tolerated. Please read the following for more information:

The Illinois State AG has filed actions against three parties for deceptive advertising practices in the marketing of acai berry products and other dietary supplements. Please keep in mind that the regulators are choosing to directly pursue affiliate marketers for their marketing practices. The full text of the press release can be found here: Illinois Attorney General – MADIGAN FILES LAWSUITS AGAINST ACAI BERRY COMPANIES.

Dr. Oz and Oprah Winfrey have also filed a lawsuit in New York for copyright and trademark infringement against approximately 50 companies, including advertisers, suppliers, ad networks, and affiliates. To put it bluntly, they are very unhappy of their celebrity status being used to market dietary supplements and cosmetics, without their permission. They have specifically listed hundreds of affiliate sites they want discontinued immediately, because the URLs use their name or the sites claim endorsements from Oprah/Dr. Oz. The full story can be found here: Oprah, Dr. Oz sue over false endorsements – Celebrities- msnbc.com�

?

I agree completely with the actions of the AG in Illinois and NY, and as former head of a network, I can also tell you that the FTC crackdown that happened on July 1st is only the first wave in a new round of compliance wars aimed squarely at the Biz Opp and Health verticals.

For too long (and I have been doing this for 12+ years) there has been a proliferation of substandard crap when it comes to offers. How can a consumer make a decision based on less than 50 words of copy and obtuse Terms & Conditions? These are the campaigns that all networks should be self policing themselves. I can tell you that there are several top networks, Azoogle and ClickBooth included, that take great pains to put campaign through compliance reviews. They are not the norm.

As much as overly aggressive affiliates are to blame, networks also need to shoulder the responsibility of not putting these offers in front of publishers. The problem is, faked endorsements, celebrity pics and patently false testimonials actually do outperform a long format sales page or even a factually based sales page. Why? The only thing I can come up with is that these are the same people who buy carloads of Sham Wow’s and Snuggie’s. They are not rocket scientists, nor even good shoppers.

Networks, if they want this segment of online advertising to survive and attract larger advertisers, need to collectively promote only compliant campaigns – no matter how much an advertiser is willing to pre-pay.

In order to be compliant, you should look for the items Azoogle (thanks Marc P.) mentioned above, for sure, but here are a few other tips affiliates can use to judge if an offer is compliant.

- Does the site explain any continuity/subscription charges above where the “action” on the page is. This could be a button, a form, or even a cart (in the case of an all-in-1 page format), whatever the “action” the end user is supposed to take on the page. If the page does not explain that after the initial Risk Free Trial, they will be charged X for whatever it is they are buying, then stay away. This is what the FTC will be looking for next. These disclosures need to be located ABOVE the action.

- Does the site have a Privacy Policy, and does it make sense?

- Does the site have an Earning Disclaimer on the page, not in a link.

- Does the site have a Terms & Conditions that has an 800# to reach Customer Service. Also, does the T & C clearly spell out how to receive a refund or how to opt out of the Risk Free Trial (beware of convoluted process� of having to obtain a pin number from one phone number and then a series if steps to receive the actual refund)? I suggest calling the number and see what happens, possibly ask the operator how many refunds they issued that day.

- If the campaign is a Risk Free Trial, does the site clearly disclose directly near the word FREE what the S/H fees are? Is it in typeface greater than 9 pica?

- If you are truly serious, order the product and see for yourself what the ordering experience is, and then attempt to return it.

- Never promote an offer that tells you that the $1 they are charging the consumer is going to be donated to charity and that this makes the offer totally free to the consumer. They are only using the transaction to get consumer’s information, as well as check to see if the card has money on it so they can rebill it.

- Never promote an offer that is using any images of celebrities unless their name is on the product itself. Oprah does not endorse any particular brand of Acai berry. And the use of News Network logo’s is also a tip off that you may want to not promote this. In addition, if you see McAfee or HackerSafe badges, click on them, if they are not linked or unclickable they are there to deceive the consumer.

- Lastly, make sure you do a search for the advertiser’s legal name and their address (should be disclosed in the T & C). Search for their name and add in the words “scam”, “fraud” or “spam”. You will also want to search the BBB to see if there are any unresolved complaints against the advertiser. NOTE: Beware of false review sites such as RipoffReport.com, they often have ulterior motives for posting negative reviews � such as charging the advertiser to remove them or worse yet, getting money to write a positive review.

These are all things networks should police, in my opinion. I know I did at Offeratti, but we had a different approach to being a network. I wish I could say that for all networks.

I applaud these actions by state’s AG’s, deceptive practices and Trademark infringement hurts everyone in our little niche of Internet Marketing. If we do not police ourselves it will be done for us and we will remain a little niche to major advertisers. And if you think the government isn’t watching, well I suggest you visit www.ftc.gov and peruse the guidelines they have for advertisers of Health products or Business Opportunity. You may think you can never promote another product again! You can, you just have to demand better from the networks who have taken these campaigns on as advertisers.

As a long time CPA trench worker, on both the advertiser and publisher side of the bench, I have noticed that many advertisers do not particularly take the precautions that they should when operating in an online environment. Particularly when it comes to CPA network distribution.

I have compiled a few of my favorite links that advertisers should find useful to protect themselves against fraud at every stage of the buying process. Because all online merchants have to deal with card-not-present transactions, they also have to strike a balance between fraud and cancellation rates.

The article located here will give you an idea of some of the factors using AVS (Address Verification Services) alone, will not be enough in today�s online environment. If you take transactions online you will want to read this document from Targusinfo.com.

I also urge you to review the Merchants Risk Council. Their Mission, as stated on their website as follows:

The Merchant Risk Council (MRC) is a merchant-led trade association focused on electronic commerce risk and payments globally. We lead industry networking, education and advocacy programs to make electronic commerce more efficient, safe and profitable.

I have found it an invaluable resource for looking into topics ranging from online fraud prevention to merchant account vendors and validation services.

Here is a link to The Merchant Risk Council.

Litle & Co. is one of the most respected companies in payment management and processing platform providers. This article has some sanguine advice for all merchants looking to improve their continuity billing practices. If you do continuity, this is a must read article. on how your processor can help you mine more money from your campaign

Litle & Co � click here to visit their site (which is also chock full of great information)

If you are in need of a verification service, please make sure to check the link below. TargusInfo provides one of the most complete solutions in the processing space and can assist you with a rigorous review of your online transaction fraud exposure. I highly recommend them to anyone who does not have validation in place for lead generation or direct sale campaigns. Here is a great article on how validation can actually help increase revenues.

Lastly, if you are in need of a shopping cart that can help you increase conversions by offering one step upsells and a host of other features that can help you increase your Average Revenue per Initial Order (ARIS), I highly recommend using Cydec. They have a rock solid platform, and the user interface has just been revamped and makes it easier than ever for an online merchant to take transactions easily, with or without their own merchant account (they can also hook up to PayPal.) The setup is quick and easy and their prices are very reasonable. Terrific for information based products as well.

The site is brand new and they are not even really open to the public, but you can see the product demo for Cydec here.

If you are a reseller or an agency, they have also built a white label program for you to resell as your own to your clients, which can be a very powerful tool as you can offer a 1 stop solution for your advertiser clients. Here is a link to the Cydec Private Label Reseller Program.

I hope these resources help you to shape a more complete fraud prevention policy and approach to your transactions. Fraud will never be eliminated, but it can be minimized with rock solid practices and trusted partners.

Last night I was doing my normal routine of answering hundreds of emails and working on multiple projects at the same time, in general staying up way too late for most people who are not meth freaks. But one of the tasks that I enjoy the best in the wee hours is reviewing new affiliates’ applications to my network, Offeratti. Particularly when they are from countries you know it is daytime, so you have a good chance of getting them on the phone.

I am usually inundated with affiliate applications for Offeratti, we have some great offers and a very loyal base of existing publishers who spread the word for us (we really appreciate that). But when it comes to publishers who participate in affiliate marketing who are not from the US or Canada, more often than not, they are rejected by CPA networks because of their location with little or no consideration of their talents or ability to convert on offers. I have to admit, I too have succumbed to this method at times. Simply because the ratio of legitimate foreigh applications I get to those who are blatantly fraudulent is astounding. Something on the order of 5% are legit, so you can see how one can get jaded.

I personally review every affiliate application that comes in to Offeratti.com, and in most cases make an outbound call to review their application with them as well as how the Offeratti Publisher Support Monks can best maximize their profit by understanding how each affiliate drives traffic. It allows us to have ZERO fraudulent activity on our network, so the extra effort on the front end is well worth it to avoid fraud issues that can be very costly in terms of time and lost revenue.

So last night, when I saw an application come from Thailand (a known hot bed of fraud), I was tempted to to simply deny the application on just their location. But being the eternal optimist, and also the fact that the application actually had a decent website attached to it, I decided to use Skype at 1 AM and call Thailand (where it was noon already). As it turns out, it was one of the more profitable calls I made all day.

You see, the affiliate had never had anyone from any network call him – EVER! This was a real opportunity to relate to this new affiliate how Offeratti is different in many ways from other CPA networks in terms of how we treat our affiliate and our advertisers. We really do want to be the Zappos of CPA Networks, at least in putting customer service first. We spent an hour on the phone reviewing how we could work together. He related to me that he has a team of people who are dedicated to “old school” techniques of online marketing. Namely SEO and PPC, with a good amount of email thrown in for good measure. I was able to help guide him to the offers that would work best for his traffic, as well as make a list of resources that we will supply his team with to better market our Exclusive campaigns.

I must have done something right, because his blog post today at CrunchyPost.com also got several more affiliates to seek out Offeratti and sign up. If I had simply taken the usual route and not gone the extra step to personally call this affiliate, I would not have been able to make a new friend across the globe, but I also would have turned my back on someone who has the potential to add hundreds of sales a month to our numbers. I have always believed that even in a wired world, it still comes down to people, no matter how hard computers keep trying to remove us from the equation. Pick up a phone and talk to someone.

And last but not least, Happy Birthday to a great friend and incredible marketer, Perry Belcher. Have a few on me buddy – see you in Austin real soon.

It’s Official, I have launched what is my most ambitious project to date. I have launched a new CPA Network – The Offeratti Network.

I finally took the plunge after playing on the outside for the last 6 years I have spent in mainstream online marketing and have decided to open my own CPA marketing network and advertising agency. I have been engaging IM guru’s over the past several months

to get me their best performing campaigns whipped into shape for distribution among affiliates and networks. These are names like Shawn Casey, Justin Blake, Yanik Silver and many others that have confirmed their involvement as Merchants for Business Opportunity niche offers.

It seems this economy has taken it’s toll on many a launch list’s performance, as well as the lack of funds most consumers are experiencing, which makes for a perfect timing

to go downmarket with solid content. In essence we are widening the net for these giants on Internet Marketing.

In addition, there are many solid offers that perform in other media’s and sales channels, but have not been ale to gain success in online marketing channels. These offers are perfect for the type of split testing machine we have been building to optimize our own in-house Biz Opp offers. So the network offerings will be a split between Offeratti’s own in house MONK (see below) built exclusives and exclusive third party advertiser offerings.

Offeratti was developed from the ground up to be a different performance network. Unlike some of the competition, here’s what you can expect when you are approved as an offeratti publisher:

• No Tiered Payouts on Downsells – Always Get Full Commission
• Live Dynamic Custom Split Testing – You Get the Highest Converting

  Control at ALL Times.

• Custom Landing Pages Tailored to Specific Marketing Channels (i.e. PPC, eMail, Banners, International, etc.)
• On Time Payouts
• Top Biz Opp Offers from The Most Successful Internet Marketers

And this is just the tip of the iceberg. What really makes us different is our dedication to building, testing and tweaking, which is done by our MONKS.

These MONKS of the Offeratti are our

Monetizing

Optimizing

New offer

Keepers

They are the reason our offers convert and why Publishers can trust that the Monks of the Offeratti are working every day to improve the quality of conversions.

Our Monks even have a jingle, take a listen here.

All the marketing hype aside, they represent our commitment to making Offeratti a truly Publisher centric network, that you can count on for top performing campaigns and a willingness to go the extra mile to ensure profitability for both Publisher and Merchant. This is the only way I have seen success in my 25 years of marketing.

I hope that you will contact me at jim @ offeratti DOT com during the Affiliate Summit West show in Las Vegas to sit down and discuss how we can make money together.

For the initial launch of the network, I wanted to do something special for those publishers (and advertisers with lists) who help us get moving quickly.

BONUS OFFER: I am offering a limited time 12.5% 2nd tier (until 2/15/09) for all 2nd tier relationships. Send me an email to find out how to qualify.

Just sign up at HERE.

Cheers,

Jim Lillig

President

The Offeratti Network

I religiously read Joel Comm’s daily Internet Marketing newsletter to see whose salesman’s smock Joel has wrapped himself in for the day. Today it is ViralURL.com’s ViralBar utility. This affiliate tool allows you to wipe out any would be commission stealers and affiliate ID fraud by cloaking your affiliate link in a most ingenious way. If you are tired of affiliate marketing fraud, this is a great choice to stop it.

I have had commissions stolen before and have used the Dwarf URL converter to shorten links and hide the Aff ID. But this goes a giant step or two further.

First, ViralURL.com’s ViralBar allows you to create a descriptive display URL (such as this one for a home writers course I am promoting: http://viralurl.com/bestdeals/writers). Doing this will allow for better”halo” when a user looks at it on a website or in an email as opposed to a link that looks like this: http://secure1.m57media.com/clients/p2c/u/?caid=XXXX. Using this link exposes my affiliate ID number (here marked by XXXX) and potentially opens me up to some unscrupulous person hiking it and then hacking into my account with the advertiser or network and switching payments to their account information and deleting mine. A not so uncommon situation if you have multiple campaigns going simultaneously and you just let them run without being diligent and checking your numbers daily. I cannot even estimate the amount of money I have lost not protecting my affiliate ID. But No More!

Now that would be cool if that’s all ViralURL.com’s ViralBar did. But there’s more.

Click on this link above and notice at the bottom of the page there is now another offer in addition to the one I am promoting. Now I have twice the ability to sell a prospect. Since I do a fair amount of email marketing, it is always a good choice to have more than less, particularly if you have an untargeted list. When the end user clicks on the offer in the ViralBar, you are transported to another offer. The commissions are all tracked in ViralURL’s subscriber area.

In addition to the additional offer being spun at the top or bottom of the page you send them to, you also get the ability to turn on additional webmasters to this excellent tool. I believe it is up to 5 deep in terms of referrals.

I like this tool, but I think I am going to like it even more after I see it generate cash. Right now I am just happy to have an excellent “halo” type URL to use in my text emails and on my sites and know that my affiliate ID numbers are not like Janet Jackson’s mammary at a Super Bowl – exposed.