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IT Management : Columns : Executive Tech: Commission Junction Bans Major 'Loyalty' Affiliate

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Commission Junction Bans Major 'Loyalty' Affiliate
October 17, 2005
By Brian Livingston

Brian Livingston Commission Junction, arguably the world's leading payment network for e-commerce traffic, has permanently banned one of its largest "loyalty" programs, according to CJ officials.

The affiliate is Shop At Home Select, a subsidiary of the Belcaro Group of Greenwood Village, Colo. The company promises small rebates on Web purchases consumers make while using the Shop At Home site or its memory-resident software.

I wrote on Sept. 13 about complaints that Shop At Home software was silently installed to users' PCs when some associated Web sites were visited. Computer experts also accused the company of keeping commissions that were automatically generated -- even if a user had never registered and therefore no "rebate" could be issued.

The story behind Commission Junction's action against Shop At Home provides a fascinating look into a rarely seen world. It reveals an ongoing war between "loyalty" programs -- which install monitoring software on users' PCs -- and e-commerce merchants that want to pay only for genuine traffic they wouldn't otherwise receive.

Commission Junction Invokes Its Policy

Loyalty programs are a controversial subject where CJ is concerned. In telephone interviews, CJ officials have told me that many programs that sign up consumers to get rebates are legitimate and that many merchants are glad to pay them commissions. Shop At Home, however, clearly crossed some kind of line.

"We identified some major violations in the activity of the Shop At Home group," says Terance Kinsky, CJ's director of network quality. "We confirmed that there was a nonconsensual install through one of their partners." This means that a Web site was installing Shop At Home's memory-resident software to visitors' PCs without their full knowledge and consent.

When asked how the installation worked, Kinsky said, "It was a site that tried to install a toolbar and it also installed several other applications. There was no EULA [end user license agreement] shown."

"Belcaro is one of those cases where we found some issues, and they corrected some," Kinsky continued. "But they couldn't demonstrate that they could control the situation, either with technology or with policies on their end."

Translation: At least some versions of Shop At Home software had the power to claim commissions once installed on a user's PC -- whether or not the user ever registered to receive rebates or even knew the software was present. And the company couldn't or wouldn't terminate its partner companies that were installing the software in that way.

Where's The Line For This Behavior?

Some CJ affiliates that send traffic to CJ merchants may have a queasy feeling right now. Is it true, I asked Kinsky, that an affiliate with numerous "distribution partners" can be permanently banned if even a single partner is caught installing its software in a questionable way?

Yes, Kinsky indicated. If an affiliate offers its distribution partners money on "either a revenue share or a per-install basis" for loading software onto users' PCs, the affiliate must make sure all of the installations have the consent of the users.

As I read the situation, this means two things. First, if an affiliate runs a "loyalty" program -- in which software automatically generates commissions when users merely surf to an e-commerce site (as opposed to clicking an affiliate link) -- the affiliate's software had better not function unless the user clearly was aware of and wanted it. Second, if an affiliate claims to send rebates to users of such software, no commissions can be claimed except for users who have formally joined the program.

Kinsky said Shop At Home was terminated from CJ's affiliate network on Oct. 11. It was also eliminated from the operations of BFAST, a CJ subsidiary with slightly different termination policies, on Oct. 14, he said.

This was confirmed in a separate telephone interview with Layli Sobhani, a CJ press relations spokeswoman. Sobhani added, however, that CJ doesn't generally issue a press release or post a Web page describing actions that are taken against affiliates. So you probably won't find an official announcement of this action by searching the Commission Junction site.

Shop At Home Confirms The Suspension

In a brief telephone interview, Michelle Pujol, the Belcaro Group's director of Internet marketing, confirmed CJ's ban. In a written statement that was subsequently e-mailed to me, the company said, in full:

"We work with many suppliers, including the Commission Junction network. As with any of our supplier partners, misunderstandings and miscommunications can occur. We are concerned about how this will impact our Commission Junction Merchant Partners' fourth quarter goals, and regret any impact on these valued partners. We look forward to resolving any misunderstandings between us and the Commission Junction network."

How Many Other Affiliates Are Questionable?

CJ previously terminated 180Solutions in April and eXact Advertising in May, two companies that were accused of installing adware without users' consent. (BFAST deactivated the same companies in September, according to a CJ spokeswoman.)

These large-scale suspensions had the effect of cutting CJ's revenue, while simultaneously improving the legitimacy of its service for e-commerce merchants. The obvious question is how many other CJ affiliates are still using the same behaviors.

Ben Edelman, a Harvard Law School graduate and noted adware researcher, thinks there are more such cases to be found. He should know, since he published a detailed analysis of Shop At Home Select on Aug. 11 and has also posted exposés of numerous adware companies.

"As with its prior terminations of 180solutions, Direct Revenue, and eXact Advertising, CJ is a leader among major affiliate networks," says Edelman. "Yet it's easy to wish for more from CJ. For one, the wrongful installations have gone on for months. CJ's delayed response means CJ merchants have already paid out many thousands -- millions? -- of dollars of commissions through CJ to Shop At Home Select. They're not getting this money back, even though it's well-known that Shop At Home hadn't fairly earned large portions of these commissions."

Edelman said affiliate networks such as Kolimbo, Kowabunga, and ShareASale have strict no-adware policies, and that CJ and other large networks should take a harder line.

The Next Level Of Detection

Based on my research, Commission Junction is in fact ramping up a bad-guy detection program that's little known, even to its own affiliates and merchants.

Next week, I'll report on this effort and how it might change the relationship between Internet e-commerce giants and the thousands of affiliates who send them traffic.

Brian Livingston is the editor of and the coauthor of "Windows Me Secrets" and nine other books. Send story ideas to him via his contact page. To subscribe free and receive Executive Tech via e-mail, visit our signup page.

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