Affiliate Marketing

Much of the discussion amongst marketers at Affiliate Summit West 2010 was about the recent crackdown by VISA and Mastercard on those online companies using forced continuity (negative option, free trials and free shipping ploys) to sell their products.

Forced continuity happens when a customer who wants Product A is forced to pay ongoing charges for a subscription to Product B in order to access Product A. Product B is usually presented as a bonus-loaded trial offer for “just $1”.

Salivating over their good fortune, the unsuspecting victim signs up for the offer with their credit card and once the trial period is over, recurring charges kick in. In too many cases, the information regarding the recurring billing requires a microscope to decipher. As most consumers apparently haven't the stamina to read glaringly obvious information regarding the conditions of their purchase, suffice to say that they won't bother with the microscope.

Six months later the buyer realizes that they've been charged $39.95 monthly for a product that they haven't used in 5, and then attempt to terminate the subscription. Termination involves a herculean effort over at least 3 months during which their card is still being charged, IF they are able to resolve the issue with the merchant, who mysteriously disappears when talk turns to cancellation, and especially refunds. Too often the customer is forced to appeal to their credit card company.

Although this practice is illegal in most of the U.S. and Canada, slimy Internet marketers have employed this practice successfully to scam millions out of consumers — until a few weeks ago.

I guess after dealing with too many angry consumers, VISA and MasterCard finally got wise a few weeks ago and shut down over 100 merchant accounts of those using forced continuity programs.

In a letter to one affected party, the merchant account provider reminds them that:

The FTC has recently published guidelines regarding “Negative Option” enrollment programs and is taking a very aggressive position against merchants utilizing/employing this business practice. Recommendations take in part from the FTC’s website may include but are not limited to the following:

Material terms should be disclosed in a clear, concise manner. Unnecessarily long or inconsistent terms are viewed as an attempt to mislead the consumer.

Terms should be disclosed in a conspicuous manner, clearly placed and labeled on websites in a location that indicates the importance and relevance to the transaction. Fonts and colors must be easy to view.

Material terms must be disclosed prior to completion of the transaction and before a financial obligation is incurred by the consumer.

Customers must provide affirmative consent to any offer, examples include a mandatory “I Agree…” statement checkbox, where the customer is acknowledging the Terms and Conditions of the offer and consents to be entered into continuity program as a result of completing the transaction. Pre-checked boxes do not qualify as affirmative consent.

Merchants must not discourage or make difficult in any way the disclosed cancellation procedures and all cancellation requests must be honored in accordance with the stated terms of the transaction.

Gee, what a concept. Honesty, integrity and transparency.

So, here's the warning.

If you are promoting Internet marketing business opportunities, ACAI berry, weight loss and other products that use forced continuity, it's time to check your merchants' offers thoroughly, and confirm that they're still in business.

You might be shocked to learn which of the big players no longer have merchant accounts.