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

[-kudos-]

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Hi all,

I would like to take this opportunity to let people know about what happened to me with the affiliate network, Zanox.

Last year I was heavily promoting a few ringtone type offers via Zanox. Things were going quite well and I had accumulated a balance of £12,000. The procedure was for the sales to initially credit as pending, and then after a fixed period of 14 days, they were approved or declined. I operate an incentive business model in the UK, and the way I work is as soon as the commissions are approved, I pay out to my users. My business is very successful and popular and I have many thousands of happy customers.

The bulk of that £12k was approved commissions, which meant I had already paid this out to my users, as per the business modal description above. The commission hadn't actually been paid to me yet but that wasn't a problem, or so I thought....

One day one of their affiliate managers contacted me (as he often did) informing me that a lot of the transactions were fraudulent. For the record, I had absolutely no idea about this and straight away took action based on what they told me. Several users were banned, and some credits were declined at my end.

However Zanox took a different approach. First they banned me from their site and strongly accused me of fraudulent behaviour. Then after this was resolved, all of the commissions that were once APPROVED were DECLINED. I had already paid out this money to my users so I was many thousands of pounds out of pocket. Now from my point of view, the pending period is for the merchants / affiliate networks to check the lead/sale to make sure it's ok. Once approved that should mean that it's ok and that my company will get the commission. Zanox don't think this!!

This was summer 2008. It is now April 2009, and after long, drawn out email conversations, they have concluded that they DO NOT owe me anything, and have refused to pay.

Frankly I find this disgusting treatment from such a big affiliate company. My business is successful but it cannot take such big losses. Bascially I paid my users out of my own pocket.

I am in the process of taking legal action against them but wanted to post here first.

I'm sure a payout to me would have been easier considering how hard I was pushed to run certain offers for them.

Maybe somebody from Zanox would like to comment???

[grasshopper]

Although I won't comment on the specifics of this case - other to express support and empathy for a fellow affiliate who is obviously caught in a very tough situation - I will say that this kind of case serves as a very clear warning for cashback affiliates. The cashback model is open to abuse by unscrupulous 'customers" therefore we - as affiliates bearing the risk - must be completely fastidious about checking the bona-fides of those 'customers' to whom we are paying cash back. Kudos, I am really sorry this happened. Good luck with everything M8.

[-kudos-]

Thanks for the comments and the support. It's appreciated!

[Zanox]

Hi Kudos.

We do not believe that it is relevant or appropriate at this stage to have brought this issue to a public forum. However as one forum member has mentioned, this will hopefully emphasise the need for cashback affiliates to be vigilant about unscrupulous users who abuse the cashback model and in so doing damage the good work and reputation of cashbacks in general.

We are aware of all the facts in your particular case, and many of these facts you have omitted from your post. We have made our position clear to you regarding your case. In light of all the facts and the evidence provided to you by our merchants, it is regrettable that you feel the need to pursue the matter further. However as you are aware, we have been awaiting your legal response for some time now.

Zanox have, and will continue to look after the interests of both our merchants and affiliates. Our policy regarding payments to affiliates is in line with many other networks and is based on VALID business transactions which have been CONFIRMED and PAID by our merchants.

Please feel free to contact us directly if you wish to discuss the matter any further.

[-kudos-]

Thanks for your reply.

First off I would like to say that I personally disagree with your comment regarding the necessity of bringing this subject into the public domain. I think its very relevant considering this could happen again to another decent, honest, hard-working affiliate such as myself.

I work extremely hard in the operations of my business and overall the business is very successful, but, lets be honest, £12k is a lot of money! I had paid out to my customers in good faith because you approved the commissions at your end. The general rule is that once approved, that's as good as paid. Not so with yourselves!

My point is, that if yours or your merchants systems/staff are inadequate to detect the fraud before the end of the pending period, then you should really honour the agreement, and pay your affiliates. Then address the issue to ensure it doesn't keep happening. It shouldn't be the affiliate, which is normally the smallest company in the relationship, which takes the hit.

I except that my users were committing fraud but I was entirely unaware of this point at the time. I can only work on what I see from the affiliate networks reports. From these I paid out in the region of 75% of the balance owed to me. Some leads were still pending when they were approved and that is obviously fine. I hadn't paid out off the back of those leads.

I have spoken with several other UK networks regarding this, and all of them, except none, are shocked that Zanox as a large company haven't paid out to settle this. In fact, to take it a step further, a similar situation arose around the same time as the Zanox situation. The network involved (whom I won't mention) paid the commission owed, even though the merchant was refusing to pay them. I continue to work with this network, and generate a lot of leads which are of good quality.

I would say that Zanox's stance is very short-sighted, and considering they are trying to build their network in the UK, they aren't going the right way about it by short changing their affiliates.

To address your comment about missing facts, clearly I can't post every detail but I believe my OP contains the essence of the situation. Feel free to weigh in with any facts you feel I have missed out.

Legal action is being considered and I have been holding discussions with several German attorneys to take the matter further. This isn't my wish but I do not feel I should be the only one to suffer from this. Frankly, I think Zanox should take some of the hit too. I don't think it would hurt you as much as it hurts me, financially.

I'm perfectly willing to continue discussions with you but it became very difficult with phone calls going unreturned etc. This is why my accountant took it over. Feel free to call me if you wish to discuss it further. I'll continue to update this thread with relevant, truthful details of the events to come.

[max99]

All I shall say is that it my opinion if a transaction in a network area is approved then it will be paid, the fraud/duplication/disapproval should take place in the pending time!

[Hero]

apologies for butting in on another network's section but I have a question for kudos, not for the specific case: why would you pay out commissions before receiving the money yourself? Transactions get approved, but invoices can be pending for a while, leaving you out of pocket for a long time and exposing you to fraud from users.

[tijan]

why would you pay out commissions before receiving the money yourself? Transactions get approved

He was taking risk to build trust and loyalty with his users since the payment have been approved anyway. Risk taking is part of business strategies but you get hit when it goes wrong. Thats what makes a man. He may have lost 12k but the loyalty built is worth more than gold.

Tijan
www.z-mirage.com

[rob.co.uk]

Another way of putting it to Zanox would be, can they define the word 'approved' ?

[Cheapdvds]

approved is approved, simple

if it cant be approved or declined for whatever reason in that 14 days then that approval process rule shouldnt be 14 days but 30/60/90 days

[findlite]

Hi Kudos.

We do not believe that it is relevant or appropriate at this stage to have brought this issue to a public forum.

Why...? So you can keep the fact you don't pay people a secret

However as one forum member has mentioned, this will hopefully emphasise the need for cashback affiliates to be vigilant about unscrupulous users who abuse the cashback model and in so doing damage the good work and reputation of cashbacks in general.

Hopefully it will emphasise the need to stay away from certain networks.

We are aware of all the facts in your particular case, and many of these facts you have omitted from your post.

Care to elaborate?...

We have made our position clear to you regarding your case.

Wow your so kind!

In light of all the facts and the evidence provided to you by our merchants, it is regrettable that you feel the need to pursue the matter further. However as you are aware, we have been awaiting your legal response for some time now.

Zanox have, and will continue to look after the interests of both our merchants and affiliates.

By not paying affiliates? Of course perhaps your just looking after yourself?

Our policy regarding payments to affiliates is in line with many other networks and is based on VALID business transactions which have been CONFIRMED and PAID by our merchants.

WORDS IN UPPER-CASE DON'T MAKE UP FOR THE FACT YOU DON'T PAY PEOPLE!

Please feel free to contact us directly if you wish to discuss the matter any further.

What possible satisfaction would he get?

Rant Over.....

[D-Mac]

Is anybody pursuing the fraudsters?

[-kudos-]

apologies for butting in on another network's section but I have a question for kudos, not for the specific case: why would you pay out commissions before receiving the money yourself? Transactions get approved, but invoices can be pending for a while, leaving you out of pocket for a long time and exposing you to fraud from users.

tijan answered this one for me. 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.

approved is approved, simple. if it cant be approved or declined for whatever reason in that 14 days then that approval process rule shouldnt be 14 days but 30/60/90 days

I agree.

I hope my posts are understood correctly as well. In no way am I condoning fraudulent behaviour. I take very serious action to any member who is caught defrauding any offer, with any aff network. My main point is the pending -> approved -> declined pattern that Zanox took after finding out about the fraud, and their unwillingness to pay me anything.

For the record I did receive £837 off them before the troubles started. Apparently, although I find this difficult to believe, only £90 (approx) was genuine! So from their point of view, I have done ok from it. BUT, I have paid out my users off the back of the approved transactions which were subsequently declined. That is my argument.

I feel Zanox could carry some of this burden, along with me. Joint responsibility. Not too much to ask from a multi-million Euro company!?

Is anybody pursuing the fraudsters?

In a word, no.

Unfortunately, a lot of those members were banned and haven't been back since. Their accounts are in deficit, due to the declined transactions that I had already paid out on. Also, mainly, they are probably only kids.

I don't want to bring the heavens down. I just want them to carry some of the weight!

EDIT:

However as you are aware, we have been awaiting your legal response for some time now.

Just wanted to address this. The last email communication from you was the 20/03/09. Since then I have been considering my options, and speaking to various professionals on the matter. I wouldn't call that "some time"!!

[renegade]

... all of the commissions that were once APPROVED were DECLINED.

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?

I'd already paid out this money to my users so I was many thousands of pounds out of pocket.

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.

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!

[Shane]

ouch .. not a happy situation for either party

"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)

However .. the pending period is just that... Zanox should have told the merchant(s) in question that the pending period had expired and no changes could be made.. the merchant had time to check what was going on, the affiliate acted in good faith, paid out cash then was .. after the pending period when transactions were approved... denied payment of them.