Zanox owe me £12k but refuse to pay!!!

[-kudos-]

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Setting to one side your dispute I would like Zanox to explain how approved commissions were declined, presumably there's a clause in Zanox T&Cs which allow this?

From their point of view they (Zanox) aren't getting paid by the merchant. The merchant feels that they shouldn't be made to pay due to the fraudulent transactions. I'm not an idiot, I understand the business behind that decision, but clearly I have to consider my business too, don't I?. From my reading there is no terms which cover their ability to decline previously approved transactions.

I'm sorry to hear you're out of pocket but a lesson any affiliate needs to learn early is that commission only counts when it's in your bank account.

Thank you!! I've been doing this for a while so I understand the risks. I guess you live and learn, but to be honest, I haven't changed my business model. I still pay out up to 2-3 months before receiving earned commissions. Like I mentioned before, the business wouldn't be where it is today if I didn't do this. Of that I am sure!

I hope your company survives and you live to earn commissions another day. I've had no problems with payments from Zanox - but I would like them to owe me 12k instead of 12 euros!

Thanks! It has, and will!

"The general rule is that once approved, that's as good as paid"

it maybe a general rule but I know of at least one other company that ultimately failed due to thinking approved = good as paid.. it's nothing until it's in the bank (and even then some (CJ at least) can claw it back from other commissions later)

I'm aware of this but the Zanox T&C's do not state that. I don't work with CJ for that reason.

I guess it's the principal of the matter. My business generates a lot of traffic , which Zanox is now missing out on. Also, a lot of companies that I talk to use the same business model as myself. We share ideas etc, which means they now wouldn't touch Zanox with a 12-ft barge pole. Had/if a payment was made to me to compensate for the losses, even if the merchant hadn't paid them, I cant help but think that this would go a long way to building a solid affiliate network in the UK. Just my thoughts.

[toast8172]

Hi,
Been reading the thread and thought I'd see if I can find anything in their terms.
I found the following
http://www.zanox.com/opencms/export/...t_26092008.pdf
which included this point
3.2.6 Cancelling transactions
Transactions that are made as a result of prohibited activities by breaching the standard business
terms or this Code of Conduct or by some other illegal means may also be cancelled by zanox after
confirmation by the advertiser.

So I am guessing this is why they feel they can cancel despite the merchant authorising the transaction originally (personally don't think this is very fair :td)

[hpops]

Hi,
Been reading the thread and thought I'd see if I can find anything in their terms.
I found the following
http://www.zanox.com/opencms/export/...t_26092008.pdf
which included this point
3.2.6 Cancelling transactions
Transactions that are made as a result of prohibited activities by breaching the standard business
terms or this Code of Conduct or by some other illegal means may also be cancelled by zanox after
confirmation by the advertiser.

So I am guessing this is why they feel they can cancel despite the merchant authorising the transaction originally (personally don't think this is very fair :td)

Interesting case this, firstly Kudos, you have my upmost sympathy for your loss. The terms quoted above do clearly exonerate Zanox from any contractual payments.

I'm sorry to move away from the specifics of the case but there are some important lessons that all parties should be learning here.

1) Users commit more fraud than affiliates - take a serious ammount of time and consideration before accusing an affiliate of fraud, particularly those in the reward space.
2) Affiliates who operate a reward model should instigate systems for better protection - whether thats a better checking system for user validity or a system for only paying when cash received on certain sectors (ringtones, leads etc)
3) Networks should ALWAYS ALWAYS ensure that merchants fulfill their contracts, it may not have been the case here but there have been many historical instances of networks capitulating to merchants with unreasonable requests (like, un authorising sales) in order to maintain the relationship. That to me is not acceptable in a tri-partite relationship.
4) Merchants should closely look at authorisations particularly in certain sectors - when you authorise, think of it as writing 1000 mini-cheques and make sure you know they are valid.
5) Networks can lose goodwill fairly easily but gaining it takes a hell of a lot of hard work, I would have thought a well publicised and PR'd handling of these issues would have generated goodwill, if not to the value of 12k then not far off.

Once again Kudos, sorry for your loss

[-kudos-]

3.2.6 Cancelling transactions
Transactions that are made as a result of prohibited activities by breaching the standard business
terms or this Code of Conduct or by some other illegal means may also be cancelled by zanox after
confirmation by the advertiser.

Interestingly I do not recall that term being present when I last read through them!!!

In fact I have an email from one of the affiliate managers, quoting terms that were broken in this situation which lead to their decision not to pay me. That particular term wasn't in the list he produced. One would think that due to it being so closely related to the situation, he would have included it. I would imagine that they have written that term as a result of these circumstances. It certainly wasn't there before, of that I am certain!

Interesting case this, firstly Kudos, you have my upmost sympathy for your loss.

Thank you!

5) Networks can lose goodwill fairly easily but gaining it takes a hell of a lot of hard work, I would have thought a well publicised and PR'd handling of these issues would have generated goodwill, if not to the value of 12k then not far off.

I 100% agree. There are some networks whom I would defend endlessly! This is because of the relationship built between us, and the handling of similar situations.

If Zanox do change their mind, obviously I will post here to let everybody know.

[tijan]

This is really an headache, it would be very selfish of zanox not to have paid out any of this commission. The affiliate-Network-Merchant perhaps need to share the losses and not pass the buck to the affiliate. Does this prog in question have an affiliate manager? and was no one monitoring the affiliate activities for up to 3 months that such fraudulent transaction transpired?

Not to blame zanox though, cause we havent heard the otherside of the story. It would be helpful if someone could be bold to answer a few questions and put some light to this matter.

Tijan
z-mirage - Building your business is our business

[-kudos-]

The affiliate-Network-Merchant perhaps need to share the losses and not pass the buck to the affiliate.

I agree!

I not expecting particularly special treatment. I am willing to except responsibility for my users and my part in the situation. Obviously I missed the fraud along with Zanox and the merchants.

It would be decent for both parties to carry the burden of the financial losses.

Another thought occurred to me recently. I wonder if they treat their German affiliates this way, being a German company. ???

[Zanox]

Hi Kudos

The essence of the Zanox affiliate terms and conditions on fraud is that an affiliate will lose their entitlement to any remuneration for transactions that are found to be fraudulent, regardless of whether or not these transactions were previously approved by the merchant.

Zanox do however look at each case on an individual basis in order to treat both Merchants and Affiliates fairly.

In your particular case, your entire activity with Zanox took place over a period of 3 weeks and can be summariesed as follows:

7 days after you launched with Zanox, we advised you that one of our merchants had found evidence of fraud on your network. The entire activity came from a group of no more than 20 of your users (identified through the sub-id tracking). We recommended that you take appropriate measures with the relevant users to deal with this fraud. We even asked you to contact the users and request documentation from them in order to verify the validity of their transactions.

Having informed you that the fraudulent transactions would have to be declined, you advised us at this stage that this was not a problem as you DO NOT PAY your users on any pending commissions.

13 days after your launch with Zanox, we advised you that a second merchant had found evidence of fraud on your network. Almost all these transactions came from the same 20 fraudulent users that you were aware of from week 1.

21 days after your launch with Zanox two more merchants came forward with evidence of fraudulent activity on your network. Again the vast majority of these transactions were generated from the same 20 users that were responsible for the previous 2 cases of fraud.

At this stage, you advised us that you had made significant payments to your users, and we therefore arranged a meeting between yourself and one of the merchants in question. They flew into the UK especially for this meeting, however the day before the meeting you advised us that you were unable to attend.

We went ahead with the meeting and the merchant offered to let you continue promoting their product and provided that you were able to generate valid transactions, they agreed to pay you an inflated commission until such time that you had recovered the financial loss that you claimed to have incurred on their account. You however declined this offer.

With my business model I pay out daily to my users, sometimes based on commissions approved only the day before. You could look at it as risky but to be honest, I have not experienced problems with this approach. (other than with Zanox obviously - which was a unique case, to be fair). I guess it would be 'safer' to wait until I actually have the money in my pocket, so to speak, but my business would definitely not be where it is today if I had taken this route.

It is indeed a very high risk approach to pay your users before receiving the related commissions, but obviously one that you feel is worth taking. Most merchants and networks however would not be prepared to share this risk with you.

You were aware of the Zanox Terms and Conditions concerning fraud and you were informed of the fraudulent users within your first week of launching with Zanox. Neither Zanox nor the merchants can be held responsible for the fact that you allowed these users to remain in your network.

[-kudos-]

I am shocked by that reply.

Your facts are not aligned with the timeline correctly. Some of what you say is true but didnt happen at the times you suggest.

7 days after you launched with Zanox, we advised you that one of our merchants had found evidence of fraud on your network. The entire activity came from a group of no more than 20 of your users (identified through the sub-id tracking). We recommended that you take appropriate measures with the relevant users to deal with this fraud. We even asked you to contact the users and request documentation from them in order to verify the validity of their transactions.

That simply is NOT true!! I wasn't informed with any details until the 22 July 2008. This was approx one month after first being informed of suspected fraud. You hadn't even had confirmation of fraud from the merchant at the time you refer to. I wasn't provided with any form of user identification until after I had already paid out.

If you had told me about the 20 users during the first week, obviously I wouldn't be in this situation. Seems to me like you have been given a extremely summarised version of the timeline. You have been misinformed.

I was told to contact users to try to find out what was going on but was given no subIDs as you suggest. I have thousands of users and it was impossible to contact everyone of them to find out what was going on. I tried very hard to investigate but, obviously, no user who was committing fraud on my network was going to simply come forward with proof. I was flogging a dead horse at this stage.

Having informed you that the fraudulent transactions would have to be declined, you advised us at this stage that this was not a problem as you DO NOT PAY your users on any pending commissions.

That's an actual joke! I wasn't told. You simply declined them without informing me. I had to contact you to find out what was going on. At this stage all I was told was the merchant had declined the transactions whilst they were investigating fraud across the entire network, not necessarily from me!

Why have you capitalized the fact that I do not pay out on pending transactions?? I have already confirmed this! Anybody that pays out on pending sales are stupid! I paid my users when the sales were APPROVED! I was told (in an email) that once sales have been confirmed "that's it", and the merchants are obliged to pay. All of this can be backed up and proved via email conversations.

Quote from email dated 27/06/08:

My question:

Thanks for the update.

First of all, let me just say that I haven’t paid out on the back of this offer so it isn’t the end of the world! (this refers to the declined sales which were only pending, these ones hadn't been approved.)

I don’t pay out on pending commissions.

Can you just confirm whether this bulk denial would ever happen if the sales had been approved??

That would be where the massive problems came in.

I don’t know what users are fraudulent unfortunately. I do usually rely on the feedback from merchants.

If you could keep me updated that would be great.

Zanox's response:

Hi Lee.

No, once sales are confirmed, then that's it. We have never had a case where sales are confirmed and then cancelled at a later stage. This would pose so many issues for us. Advertisers have to use their confirmation period to investigate any irregular sales.

Even this case where Splash have cancelled all sales while they are carrying out an investigating is very unusual on our network.

Cheers.

R*******

:td

13 days after your launch with Zanox, we advised you that a second merchant had found evidence of fraud on your network. Almost all these transactions came from the same 20 fraudulent users that you were aware of from week 1.

Again, I wasn't told this at this stage!!! You had been contacted my one of your merchants with suggestions of fraud. This had been communicated to me but by this stage most of the sales had been approved and I had paid out. I still had no evidence from you about fraud. In the email that I was sent, advising me about fraud, you were pushing other offers on me. The emails were very light-hearted and friendly. No reason to be worried, or so I thought.

Quoted email from Zanox:

Hi Lee.

Hope you're well.

Just a quick one. Unfortunately I need to ask you to pause Glomobi and Zemgo for now. Seems to be happening with all our mobile programs .

RD Media (who owns these brands) are investigating the sales that we have generated for them. Again, this is a network wide issue, and they haven't indicated yet which affiliates they are looking into. Unlike Wixawin, they normally respond really quickly to issues like this, so I'm hoping well get an update for you soon, and that we you'll be able to continue running the program asap.

In the meantime, if you could please check on your side to see if you can spot anything unusual.

Thanks Lee.

R*******

21 days after your launch with Zanox two more merchants came forward with evidence of fraudulent activity on your network. Again the vast majority of these transactions were generated from the same 20 users that were responsible for the previous 2 cases of fraud.

Hindsight is a wonderful thing!!!

At this stage, you advised us that you had made significant payments to your users, and we therefore arranged a meeting between yourself and one of the merchants in question. They flew into the UK especially for this meeting, however the day before the meeting you advised us that you were unable to attend.

This is infact true and I apologised profusely! My Wife was pregnant with our second Son and she was extremely unwell. As much as I wanted to meet and try to get this sorted, I wasn't going to leave her. This is a personal matter, but the pregnancy was difficult due to previous events. I don't appreciate you holding that against me.

We went ahead with the meeting and the merchant offered to let you continue promoting their product and provided that you were able to generate valid transactions, they agreed to pay you an inflated commission until such time that you had recovered the financial loss that you claimed to have incurred on their account. You however declined this offer.

That is not true!! I was never given that offer by anybody at Zanox. I was told that I could continue promoting the merchant but was never told about recuperation of commissions! Frankly, why would I want to continue working with you whilst this matter is unresolved.

It is indeed a very high risk approach to pay your users before receiving the related commissions, but obviously one that you feel is worth taking.

I have operated this way since launch with every network and have not been treated like this by any of them. They appreciate the traffic I drive to them. Evidently, some sales have been fraudulent. But we worked together to resolve the situation in a manner that was fitting for all parties involved. Therefore they continue to earn revenue from the traffic my business generates.

You were aware of the Zanox Terms and Conditions concerning fraud...

No I wasn't. I refer back to the quoted email above where it clearly states from a member of Zanox's team, that once approved, "that's it".

...and you were informed of the fraudulent users within your first week of launching with Zanox.

Wrong again!!!! Read above ^

Neither Zanox nor the merchants can be held responsible...

I disagree, obviously!

[-kudos-]

Sorry to double post but I forgot to mention, all of my facts can be proved via email conversations held with Zanox.

Having reviewed them this morning, I have proof that I paid out off the back of approved commissions, and that I was given no indication of which users were committing the fraud, until AFTER the approved commissions were declined!

It makes very interesting reading, especially following Zanox's previous reply!!!!

[Cheapdvds]

so the network suspected something was wrong in the first week and it takes 14 days for commissions to be confirmed , yet confirmed comissions were then declined ???

seems a little odd

[-kudos-]

so the network suspected something was wrong in the first week and it takes 14 days for commissions to be confirmed , yet confirmed comissions were then declined ???

seems a little odd

Good point!

The early suspicions were very vague, and were not enough to take action, from any angle. I guess this solidifies my version of events somewhat!

[bapages]

Firstly Kudos whilst I understand your point completely, you are taking legal advise and I see your position now compromised by making this public as you have a duty of privacy in the matter. Also the protocal is to talk the issue to a resolution suitable on bath parts, which I am sure there is after all Zanox will have lost out themselves with the overrides they rely on to stay in business.

Secondly speaking as both and affiliate and merchant, networks confuse the matter by having very short period for approvals with some fraudulent transactions can take as long a 6 months to come to light which then it is not reasonable for the merchant to lose the monies of the goods sent and pay commissions and over rides to the networks as well.

In addition, I see you have a duty to screen your customers you are paying cashback to as you are providing a service and should use a fraud screening service such as 'third man' or similar and chack the obviouse signs of fraud (generic email addresses ect like joeblogs102554@yahoo.com - hope this is not a genuine address :blush).

[-kudos-]

In addition, I see you have a duty to screen your customers you are paying cashback to as you are providing a service and should use a fraud screening service such as 'third man' or similar and chack the obviouse signs of fraud (generic email addresses ect like joeblogs102554@yahoo.com - hope this is not a genuine address :blush).

Thanks for your input!!

I do screen my users very heavily, both by checking IP address and postal addresses. However, those checks aren't carried out until the user places an order. It would be impossible to check every user that joins!

In the case outlined in this thread, all the user details appeared fine at my end. In order to check for offer fraud, I have to rely on the merchants/affiliate networks data. In this case the network approved the sales, therefore confirming that they were valid. This was also backed up by numerous emails, as outlined above.

When the monies were sent to the users in question, there was no reason to decline them. Their details checked out, and the offers they had completed had been approved. After confirming with my Zanox contact that they wouldn't decline approved sales, I paid out. This is my argument!

[gamesblaster]

Bottom line pal they are quite simply pulling a fast one, i admire you for bringing it to everyones attention. Its only right that companies who dont play it straight are exposed so nobody else gets stung. I lost 80k in a not to disimlar way 5 years ago.It took me a long time to get over it.Needless to say i did im a lot stronger and wiser for the whole experience. Get in touch with me could have something really interesting to offer you.......And Goodluck.

[-kudos-]

I lost 80k in a not to disimlar way 5 years ago.It took me a long time to get over it.

Ouch!!!

.......And Goodluck.

Thank you!