I will be launching an affiliate program for two of my developed products in a short time. I will have a script where I will accept new affiliates. Each time there is a sale, the affiliate who referred the customer will get commission. My payouts to affiliates will be through paypal and egold. I haven't done this before, so I have a question for the experienced in this area. Which types of fraud occur in such a program? How can I spot a fraud? Can artificial buying occur? For example, a scammer has a Virtual Credit Card and buys 100 items through his own affiliate link to get commission. After I have paid him commission, he request a chargeback and gets all his money back + all the commission I have paid him. What are other types of fraud in this bussines? What should I watch for?
I would suggest to use one of the large affiliate companies, especially if you are new to this business. Either way, just make sure that the affiliate receives his commission only after you get the approval from the credit card company.
I recommend working with wires as payment instead of Paypal. There are too many issues with Paypal, it may seem easiest at first but if you're worried about fraud, Paypal won't do much to protect you.
Thanks for all the tips. Instead of using an established affiliate network, who would manage things for me and also paying them I would rather have control all by myself. I was thinking of using this script: http://www.qualityunit.com/postaffiliatepro/ What do you think, is it safe?
About the virtual credit card orders, you dont have to worry about it. It doesnt exist chargeback in this situation, because VCCs are not refoundable. But, you will have real problem if you will accept e-gold as payment option for your affiliates: e-gold is anonymous and if an affiliate does fraud he will get away very easy with the money. Just stick to Paypal.