So, you’ve earned yourself a handsome affiliate commission only to check your affiliate account later & notice that it’s been revoked due to a chargeback.
Frustrating times, right? Commission chargebacks are soul-destroying. 😢
But what exactly is an affiliate marketing commission chargeback? What does it mean? And why was the money clawed back from your account?
More importantly, is there any way to get it back? And how can you avoid such chargebacks in the future?
Well, if those are some of the things you’ve found yourself wondering then you can rest assured that you’ve landed in the right place to find out the answers.
In this blog post, I’m going to uncover everything there is you need to know about commission chargebacks. So, let’s dive in & get to it.
What Is a Commission Chargeback In Affiliate Marketing?
In short, a chargeback is when the person who purchased the product or service contacts their card company & states that either the transaction was fraudulent or that they were scammed.
As a result, the transaction gets reversed and so the affiliate commission gets revoked.
What’s worse, though, is that chargebacks come at a cost to the vendor, meaning they have to pay a fee to the merchant & sometimes this fee can be passed onto the affiliate, putting their balance into the negative.
As an affiliate, you won’t ever be expected to pay these fees out of your own money, but you will have to build your account balance up out of the negative before being able to request any payments.
For example, if you get hit with a commission chargeback and the fee is passed onto you, then your account may dip into a negative balance, such as -$30. This would mean that the next $30 you earned would purely go towards getting your balance out of the negative, and you’d only begin “earning” again after clearing that negative balance.
The good news, though, (depending on how you look at it) is that rather than pass the fee onto affiliates, most affiliate networks leverage a strike-based system for handling chargebacks.
So, instead of passing a fee onto you, they will simply only allow you to receive a certain number of chargebacks in a given period before suspending your account.
This way, your account will never fall into the negative, but you will have to exercise caution to make sure you don’t get too many chargebacks.
It’s still not ideal, but providing you keep your chargebacks to a minimum then at least this means you’ll never have to worry about paying the fees.
Why Are Chargebacks Bad?
Chargebacks are bad because they can cause big problems for vendors with their merchant accounts.
You see, you have vendors (who sell products or services) and you have merchants who facilitate the ability for the vendors to handle payments.
If a vendor receives a chargeback, then the merchant gets charged a fee by the card issuer (e.g. Visa).
Naturally, the merchants don’t like this & as a result, if a vendor has a high rate of chargebacks then they will either increase their fees-per-transaction, or they will cancel their account altogether.
Obviously, the vendor doesn’t want either of these things to happen & so, as a result, vendors are very wary of affiliates that generate chargebacks.
Instead of a vendor risking their merchant account which could prove to be catastrophic for their business, they would simply get rid of any affiliates with high chargeback rates.
And when it comes to affiliate marketing, vendors have to be extra wary of chargebacks because there are many shady affiliates that carry out the chargebacks themselves in an attempt to commit affiliate commission fraud.
Basically, this involves them signing up for an affiliate program, then purchasing a product or service via their own affiliate link, getting paid a commission & finally, carrying out a chargeback to get the initial purchase amount back.
So all in all, their goal is to come out with their money back AND a commission payment.
As you can imagine, this is completely illegal.
But overall, the key takeaway here is that as an affiliate, you want to make sure that you’re not getting chargebacks. If you are, it’s a sign of a big problem.
How To Prevent Chargebacks
So, as mentioned earlier in this post, people file for chargebacks in an attempt to get their money back from a purchase. They do this by claiming that the transaction was fraudulent (not made by them) or that they were scammed & that what they were provided with did not match what they were pitched.
Filing for a chargeback is quite a tedious process, so for somebody to commit to it means one of 4 things:
- They truly were defrauded
- They truly felt scammed
- They had serious purchase regret
- They were trying to scam the merchant
So, there are some simple steps that you can take to avoid these scenarios.
The best way to avoid chargebacks is to make sure that you are very upfront & honest about what you’re selling & to offer the opportunity for a refund in case they find themselves disappointed.
Refunds are never ideal, but they’re always much better than chargebacks.
A fantastic way to reduce chargebacks is by offering either a free trial of whatever it is you’re selling/promoting or providing a “video demo” before the purchase to fully show them what they’ll be getting access to.
If you’re promoting a product as an affiliate & you’re very upfront about it but still receiving a lot of chargebacks, then it suggests the product is of poor quality & you’d likely be better off looking for something else to promote to your audience instead.
Also, you should be aware that some niches are far more susceptible to chargebacks than others due to “purchase regret” being more prevalent.
For example, the gambling niche typically has much higher chargeback rates as people deposit money then lose it (and deeply regret losing it) so they go through the process of filing a chargeback.
But one other thing you should be mindful of is that sometimes, you may actually just be getting targeted by scammers themselves.
People may simply be purchasing products through your affiliate links & then carrying out chargebacks in an attempt to get the products for free.
If this is the case then you would need to take a closer look at your traffic sources.
For example, if you’re running adverts on a forum for scammers then naturally, you’d expect to have a high volume of shady folks coming through your links.
By refining your traffic sources & opting for higher quality, you’ll be able to not only reduce your commission chargebacks but also increase your sales conversions.
The Bottom Line: Avoiding Affiliate Chargebacks
As you can likely now see, chargebacks are something you want to strongly avoid in affiliate marketing.
There’s nothing more painful as an affiliate than logging into your reporting dashboard only to see that the huge commission you earned has been clawed back to a commission chargeback.
😢
But I hope that this guide has proved to be helpful & given you the insights needed to lower your chargeback rates & prevent commission chargebacks from ever happening in the first place.
Of course, if you happen to have any further questions or comments then don’t hesitate to leave them below.
