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hapajo
Joined:
26 Nov 2003
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8
Location:
Faroe Islands
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Posted: Sun Apr 04, 2004 2:31 am
Post subject: Affiliates Agreement: You pay for returned products!
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This is part of an affiliate agreement for a company (the products are tangible):
"If a Product that generated a referral fee is returned by the customer, we will deduct the corresponding fee from your next quarterly payment. If there is no subsequent payment, we may send you an invoice for the fee."
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Question:
Is that last part, we may send you an invoice for the fee, something you would worry about. Surely, one doesn't sign up for an affiliate program to pay the company for promoting its products...
But of course, if the return rate is low, there shouldn't be a big problem, but I just think those terms sound a bit "hostile". Or what? Would you stay away from it? And are those affiliate terms usual for tangible products? By the way, they also say "we may send you an invoice" and not "we will". How would you interpret that?
Hans Pauli
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Debs
Joined:
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4296
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NY
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Posted: Sun Apr 04, 2004 2:59 am
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With tangible products, refunds creating a compensating giveback of affiliate commission is standard. Otherwise, you could have people buy all kinds of things from your links, then have them returned. The merchant would, quite quickly, go out of business, or at the very least close their affiliate program.
It is on the publishers back to check out merchants, and their products, as well as track their own stats. If you find a merchant with a high rate of returns, then that may be a merchant you want to replace immediately.
BTW, this isn't just tangible products, ebooks, software, etc. all follow pretty much the same route, if the item is returned, you have to return the commission ... one way or the other.
Debs
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mdr02125
Joined:
13 Jan 2004
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146
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Posted: Sun Apr 04, 2004 3:38 am
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hapajo,
In general it would probably be unlikely you would be invoiced. Unless you had a HUGE return that just occurred after a time of low commissions. If you monitor the merchant and drop it if there are problems. Many merchants will even hold back 5% of commission for a few months due to accounts that don't pay / go to collections.
Unfortunately with selling on the internet, the merchant gets stuck with the $ lost if there is credit card fraud or even disputes. So, without this clause, someone dishonest would sign up as an affiliate and then they have friends would buy a bunch of stuff - which they would then not return and/or not pay for.
Assuming the product is all returned under the merchant return policy there is no fraud or no grounds for prosecution.
Suppose affiliate has friends buy 50 computers at $2,000 each = $100,000
Affiliate receives comission $5,000
Computers are returned to the merchant and refunds received. The merchant tries to charge a restocking fee but disputes are filed with the credit card company charging misrepresentation of product etc. so they are unsuccessful.
Affiliate makes $5,000. Merchant has lost $5,000 plus about $10,000 (conservatively) to refurbish and re-sell the equipment, plus whatever costs in labor to handle these credit card disputes.
It's not a perfect example (if affiliate pays to ship the computer back it could eat up the commission) but as you can see the affiliate program wants some protection!
Mark
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Bobby
Joined:
12 Jul 2003
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764
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Posted: Sun Apr 04, 2004 4:43 am
Post subject: Re: Affiliates Agreement: You pay for returned products!
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| hapajo wrote: | Is that last part, we may send you an invoice for the fee, something you would worry about. Surely, one doesn't sign up for an affiliate program to pay the company for promoting its products...
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You wouldn't be pay the company for promoting its products.
Let's say you earn an affiliate commission of $20 from a sale. The customer returns the product to the merchant for a refund.
The merchant would then deduct $20 from your next commission check.
However, suppose you had stopped promoting and don't have a commission check due? The merchant is reserving the ability to send you a bill to get you to return the $20.
You're not paying anything, you're breaking even.
Bobby |
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