One of our affiliate program management clients has just had a number of chargebacks on transactions referred by one affiliate. They all came from people whose cards were used to buy the product they never wanted to purchase. It was a case of wide-spread fraud on the part of the affiliate. So, the client came to us, requesting reversal of all affiliate commissions paid on these fraudulent orders.
Upon logging into the system we saw that most of these commissions have already locked. The client originally went with the network’s default “commissions lock on the 20th of the month following the original transaction”. On some networks it is the 10th date of the month, on others — it’s the 20th…
Either way, in many situations it is best to go away from these default settings, and set your own custom rules (yes, when fraud occurs networks will often work with you to resolve the problem; but you still want to safeguard yourself as merchant). Here are just a few instances when the above-described lock dates won’t work for you:
- If you have a 30-day (or longer) trial period
- If there’s an XX-days 100% money-back satisfaction-guaranteed policy in place
- If you have an XX-days no-questions-asked return policy
- When don’t find out about chargebacks until few weeks after the original charge
When calculating your locking period, look at all the factors that could cause a return of the money back to the customer, and give yourself just enough time to reverse any related affiliate commissions.
IMPORTANT: Don’t abuse your right to reverse affiliate commissions; and, when possible, do put together a “no reversals” policy (a good example of one may be found here). The good affiliates will appreciate it, while the bad ones (those that send you fraudulent transactions) will get their commissions reversed, anyway.
4 thoughts on “How to Calculate a Locking Period”
Nice info, would have been a perfect affiliate marketing world if fraud did not exist.. but it comes with the Territory unfortunately.
While fraud is inevitable, focused affiliate program management is what can prevent most of it.
Great post! I think if you have a payout that’s higher than the purchase price – you may also want to consider a longer locking period.
True, Bonnie. Hosting affiliate programs come to mind. There, besides longer locking periods, merchants also introduce certain conditions that would make the commission stick (e.g.: commission paid only on annual or 6 mo subscriptions, or: customer must retain an active account for 3 months of more, etc).