If you have an affiliate program for your products and/or services, when should you pay affiliates after a commission has been earned?
It depends on your risk comfort level and the quality of your affiliates.
Affiliate Fraud
Unfortunately, affiliate fraud is a common issue. If you haven’t prescreened affiliate applicants before approving them to join your program, chances are you’re going to have multiple con artists gaming the system to increase their payouts by screwing you over and cheating other affiliates.
Refund Periods Affect When You Pay Affiliates Commissions
So, how do you protect yourself and the integrity of your program?
As a general rule, it makes sense to wait to pay out commissions until after the refund period expires.
Credit Card Fraud And Affiliate Commissions
Even then, you may want to wait longer (e.g. 30 days) beyond the refund period expiration to reduce the chance you get cheated by a credit card fraud scheme.
For example, a con artist affiliate might buy stolen credit card information off the Dark Web and use it to make a bunch of bogus purchases to “earn” affiliate commissions. It might take a while for the victims to realize their credit card info has been stolen and contact their card issuers to request the charges be reversed as fraudulent.
Suddenly you’re getting hit with chargebacks by Visa, MasterCard, etc. after the affiliate has been paid and disappeared. So, you’ve lost the money on the sales plus the affiliate commissions. And you’ll be getting angry emails and phone calls from the victims who believe you’re the one who cheated them (instead of the con artist affiliate).
Where To Get Help
An experienced Internet business lawyer can craft an affiliate program agreement that’s designed to protect you and reduce your risks when you pay affiliates commissions. The attorney can also prepare the right privacy policy, terms of use, and other website legal documents you need to minimize the legal dangers of selling products and services online.
