Remember the movie “The Prime Gig” with Vince Vaughn? And “Boileroom” with Vin Diesel and Ben Affleck? Well, some of those very same tactics illustrated in these two movies are being employed in the seedy side of the Affiliate Marketing industry. I’ve been looking a little harder at organized affiliate fraud and the very same attributes of telemarketing boilerooms are being used. Which hurts our bottom line, reputation as an industry, and increases our workloads (networks, merchants, and affiliates alike).
Only these arn’t physical boiler rooms. These are physical, virtual, and outsourced. Those participating have very advanced computer systems. I thought my setup was big (5 servers for my desk alone). But no, this isn’t anything like you’ve ever seen before. Tens of multi-core systems and 4 monitors minimum. All set up in an apartment where two or three people are cranking out Craigslist ads, bogus blogfarms, and pushing “guru” how-to’s 24×7. And they are connected with JVs (Joint Ventures) with individuals and are outsourcing other tasks across the globe.
And what is it that they’re doing? The answer is simple… Anything for a buck. Preferably anything where they can make a “big hit” and pull in several thousand dollars per month per cycle. With any deceptive means possible. Examples? Craigslist posts for Apartments for Rent, then subject interested parties to a link where they can get their credit report in order to be qualified to rent the non-existent apartment (or house, or car)! Then they take the affiliate commission for the credit report and build email lists to sell to others (and use for their own email campaigns) later. And the link they gave the person hunting an apartment? Why yes, it stuffed a few dozen cookies along the way and maybe one or two email submits happened as well.
And these groups get caught and banned from networks frequently. Their PayPal accounts dropped. Their program accounts dropped. Even their hosting and email accounts cancelled. But they continue because their tactics bring them money. Email accounts? They hire Indian, Pakistani, and Malaysian contractors to create Gmail/Hotmail/Yahoo emails by the hundreds. They do the same for Craigslist posters. They hire out (or use JV) for all the background gruntwork to create, track, and use thousands of false identities. And when you have thousands of emails tied to thousands of Craigslist/Ebay/Amazon accounts and are creating network and affiliate program accounts with these same emails the “inventory” is sizeable enough that if one gets banned, they just delete it from their list and go to the next one in line. Sometimes 8 or 10 per day!.
Do you know anyone that has 100+ email accounts tied to 1000+ domains, with matching PayPal, Ebay, Amazon, and 10 network accounts? Each enrolled in hundreds of affiliate programs? And if you had a way to organize and manage that many accounts how much would you make? Let’s do a little math.
100 bogus Craigslist ads for an Apartment for Rent or Roommate ad. Every response directed to provide a copy of a credit report.. Only accepting the credit report from one of your 100+ bogus sites. Capture their info from the bogus site and toss it at an email submit along with the credit report offer. Stuff some cookies while they’re on the bogus site. Then after your banned on all of this do it all over again (and sell the email list to a list broker).
500 email submits = $2500. 500 credit reports = $6000. Sell the email list = $100 Total = $8600.00!
Split that profit with a JV, pay off your contractors and general overhead and your taking home $5000+/month. And the really hard workers will do this 8+ times per week with different targets, different programs, and all on different fake accounts.
The big catch is that these boiler room affiliates are not operating a sustainable business model. But they’ve figured out a way to “Wash, Rinse, Repeat” to turn it into a sustainable model. You see, they KNOW their emails will be dropped, their accounts banned, etc. So, what do they do? They’ve created a system that relies on their ability to purchase email accounts, network accounts, PayPal accounts, even shell corporations. And an entire micro industry has built up around that demand.
How do we stop the scammers from ruining our industry?
There are a few things that can be done. Simply not allowing free email provider addresses to be used for Networks and Affiliate Programs is a start. If you don’t have a domain and emails in that domain you don’t get a network or program account. And the domain must have public listing that matches the name/phone/addresses.
Require a real business entity. If there isn’t a personal or business IRS EIN (Employer ID Number) then access to networks and merchant programs should be denied. And the networks need to verify all this information.
Those two items alone would be enough to nearly break the ability for these fraudsters to simply inventory fake business identities. And would have the lowest impact on true Performance Marketing Affiliates. It might be a little inconvenient. It will certainly cost everyone a little money out of our profits in the short term. But all of us in the industry will benefit from less competition from those employing deceptive practices and managers for networks and programs will end up gaining more time to concentrate on our needs instead of chasing down those that damage our industry.
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