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.

Let’s get this out of the way.

Compliance Disclaimer: Some links on this site make me money.  Go Figure.  I am writing about Affiliate Marketing. So if you choose to purchase a product or service that is linked on this site, I want to thank you for helping a working stiff like me (and probably a lot like you) make a living from his passion.  It is this site’s intention to help you make more money for yourself and your family.  (But if you aren’t OK with that arrangement , then let the FTC know, since they are the ones who so gently requested that I inform you of any monetized links, my “material relationship” in FTC speak.  Heretofore, we were both OK with me just giving away good actionable information, views and reviews (and possibly some common sense); you, the reader,  enjoying reading it and thinking it was all just the ramblings of some sophomoric f**&ing philanthropist.  Don’t misunderstand me, I truly do enjoy helping more people understand the industry I work in, but even more so, I really like having asphalt shingles over my family’s  heads instead of cardboard.)

Now I am not an attorney, although the companies I have worked with and for, have spent a small fortune making sure they hired the best compliance attorneys in the industry.  I am also not a qualified legal assistant nor have any degrees in that field or any credentials other than my own experience.   OK, now I have disclosed that I am not an expert in the field of law and that anything you read on this blog is not intended to be advice of any kind.

If you have stuck around after the disclaimers to get to the good stuff, I thank you.  But I will not be sending you any gifts to thank you, as that might appear to entice you to endorse my blog.  In fact, If I send you anything I will make sure to disclose when I am taking your address that I am not placing you on any mailing list that will be used for any future mailings you did not want to receive to your mailbox from myself or any other third party entity.  Further I will be disclosing that I will not accept any form of gifts as an enticement for writing good things about you.  If you want to send me gifts, that is nice.  My birthday is December 16th.  Just don’t expect a shining review of a piece of crap.  Because a piece of crap will always be a piece of crap no matter what color you paint it.

And that brings us to the impending Dec. 1st  deadline for compliance with the FTC’s 16 C.F.R. Part 255: Concerning the Use of Endorsements and Testimonials in Advertising: Notice Announcing Adoption of Revised Guides their Compliance Guidelines regarding endorsements and full disclosure.  According to the FTC’s David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “We wouldn’t put our orders in writing if we weren’t going to enforce them.”

If you make true statements, you can be liable under the guidelines.  If you make false statements knowingly, the guidelines are squarely aimed at you.  The problem with the truth is that while it may be a portion of your customers that experience phenomenal results, is this the case for all of your customers?  If it isn’t then you will need  to find a way to let them know this.  A simple “Individual Results May Vary” is no longer the de facto standard in for your product or services disclosure that not everyone will have the same experience.

And if you are reading this and have ever endorsed me (and you know who you are), well then I have to thank you.  But I also have to disclose that every single one of the comments on my LinkedIn profile are completely unsolicited, even though most are gratuitously verbose about what I helped them with. I would like to also solicit anyone reading this blog to post an endorsement that is mediocre as I need to present a balanced and objective image to the consumer.  I do not want to mislead them that everyone likes what I do.  Unfortunately, the people I have pissed off over the years tend not to post endorsements.  So if you have written something about me or are planning to, you will be getting an email with a form that you will need to fill out that will forever prove that you think I actually know something (or not).  Oh yes, I must also disclose the material links of my association with them.  Most of the people who have written an endorsement or testimonial about me, I have never charged a dime for my time.

The FTC is chartered to protect the consumer from fraud and deceptive practices, that is their only mission.  And from the looks of their website, they have adapted to using the Internet to get their message out.  Their has been no lack of publicity in the marketing and advertising community regarding this change and I am confident that there will be enforcements of this new standard almost immediately following the Dec. 1st 2009 deadline for compliance.  Those enforcements will serve as guideposts to where the edge of the envelope lies.

In our slice of the industry, performance marketing,  I feel the players will be particularly scrutinized, as it is the fake blogs and unabashedly biased blog posts that have irked the FTC in the first place (or at least greatly contributed to it).  Affiliates have a tendency to find the edges and exploit them, in most cases unabated by the merchants greed and unwillingness to stop the train even though they were more than likely aware it was leading consumers down a path of poor customer service or product performance.

The bottom line for all of this lies in transparency.

Oh yea, on last thing while I am disclosing.  I work for www.ClickFusion.com , which is the fusion of an online ad agency, a Cost Per Action Network and Call Center Services serving both Publishers, Advertisers and Agencies.  It is a division of www.DotComSecrets.com, which is owned by my good friend and most respected colleague, Russell Brunson.  If you want more, visit the ClickFusion website and see what our vision is for creating the next evolution of an online advertising agency.  And yes these links and endorsement are paid for.  Hell, I know where my bread is buttered.

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.

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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.