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Clickbank Targets Vendors Again – with Higher PENALTIES This Time!

A while ago Clickbank™ decided to start policing the unscrupulous vendors. They started with this, which more or less looked like an eyewash to me. In any case, if the objective was to clean out the cr*p from their marketplace, I hope they achieved it to some degree.

Now, in the second phase of their ‘crusade’ against dishonest vendors, Clickbank has decided to charge "additional fees" on vendor accounts which attract a very "high" refund/chargeback rate:

"Starting October 17, 2011, vendor accounts with a refund rate over 15% and/or chargeback rate over 1% over the past 60 days may be subject to additional fees or penalties.

Now for the record, the one ‘virtue’ that Clickbank is famous for is its relatively ‘lenient’ refund policy. I am sure that if you buy a cooking recipe ebook and say that you want a refund because burned your fingers while cooking one of the recipes mentioned in the ebook, they would certainly give it to you! :P (kidding)

But, back to the point: as a Clickbank vendor, it is your duty to ensure that your refund rate over the past 60 days remains within the threshold mentioned by Clickbank, that is:

=> Your refund rate over the past 60 days should not be more than 15%

=> Your chargeback rate over the past 60 days should not be more than 1%

What are some of the ways in which you can reduce your refund/chargeback rates? In my opinion, there are two ways:

a) If you create high-quality products you should have low refund rates. :)

Let us dissect this ‘theory’ a bit:

i) Firstly, "quality" is a very relative term; as they say, one man’s garbage is another man’s gold! A product that you return as "junk" might prove to be useful to another person!

ii) Secondly, does a high refund rate necessarily mean that the product is 100% cr*p? Not always. On one hand you have got those habitual refunders who really want to get your product for free, and all they would do is to buy it and then ask for a refund only 5 minutes later! You know damn well that they have not even opened the package they just downloaded, but hey, it is Clickbank, and you are supposed to process any refund request without asking questions, and if you don’t, Clickbank will refund the customer anyway!

Long time ago I used to sell several resell rights products as well as a few stuff of my own, on Clickbank, as a vendor! For each of these products I had a separate sales page where I would sell them using a different payment processor, PayPal. Over time I found that my refund rate with Clickbank was significantly higher than with PayPal, and many of these refunds actually came from serial refunders.

I remember one particular email where the buyer was a lady and asked for a refund because she wanted the product for "personal use only" and was NOT looking forward to reselling it, and my reasoning with her that she could use the product for her "personal use" as well was of little help (naturally), so ultimately I gave her the refund.

On another occasion, the customer directly contacted Clickbank requesting a refund on a product (without at first contacting me). This product was a software. Anyway, AFTER Clickbank had already refunded the customer, it forwarded the customer’s refund request to ME! It could not get any more ridiculous, could it? Anyway, I replied that since Clickbank had already refunded the customer, what was the pointing of sending that email to me? As an answer, they closed the "support ticket" saying that the refund request has been processed as per the VENDOR’S request!!!

Just when you thought they could not get any funnier… sometimes I wonder whether it is a software robot that manages the incoming refund requests!

I don’t know if only Clickbank attracts these types of scumbags like bees to honey, but anyway, eventually I stopped selling through Clickbank for that reason (besides, my conversion rates with Clickbank was really low, compared to PayPal; btw Clickbank buyers could pay through PayPal too)! I did like the fact that I had several Clickbank affiliates promoting me but the high refund rate kinda hurt! Your mileage may vary though!

On the other, how many times have you actually used a digital product that you purchased? Veteran internet marketers say that many customers buy digital products such as ebooks and softwares without any idea of what to do with them, and many a time they even forget about using the product they purchased! Heck, I have been guilty of this myself! ;)

So, a situation like:

- The customer not using the product for a considerable time and then suddenly one day finding a charge from Clickbank on his credit card and asking the bank to reverse this charge because he did not authorize it

OR

- Not using the product at all and asking for a refund a couple of days later because the product "did not work for him"

cannot be ruled out!

In either case, the product vendor may end up with a refund/chargeback rate that is more than the stipulated threshold!

Of course there are several REAL "bad guys" over there who make a killing by selling cr*p on the Clickbank marketplace. They know very well that a lot of customers buy stuff on impulse and never actually use what they purchase, so they can get away by selling cr*p! I would like to believe that at least 40-50% vendors on the Clickbank marketplace are ‘cr*p selling gurus!

In fact, these days I am kinda paranoid to promote any new "Clickbank" product unless I am absolutely sure that the product is genuine! In my mind, Clickbank and "sleaze" goes together. Let us hope that these new policies help bring these guys to book (but I wish they had started this cleanup years ago so that I would have had much less "competition" as a vendor :P )!

b) Another solution is that you create physical versions of your digital product and thus lower your refund rate! Now THIS IS one solution that I believe could truly reduce your refund rates! It is well known that compared to digital products, fewer people bother to ask for refunds on physical products; also, people value "physical products" more highly than digital stuff.

Personally there have been instances when I have deleted the digital version of a product from my PC but kept the physical version which came in the form of compact discs. Of course creating physical products comes with some extra overhead but the vendor can easily recoup the expenses by charging more for the product, or charging extra for shipping a physical version of the same product!

To conclude, Clickbank’s new policy has the power of not only cleaning its marketplace of junk but also that of screwing even honest vendors! Whether Clickbank’s real intention is to keep their marketplace clean or simply increase their bottmline in the true "capitalistic" fashion is something only time will tell!

Your thoughts? Just click here to post your thoughts. I value them a lot! :D

6 Comments

  1. Paul Guzman

    Clickbank has taken a bad rap lately and rightly so. Way to much affiliate garbage being sold. I am currently in the process of launching a niche marketing product…do I go through clickbank or just thru PayPal.

    I would like to read your comments on this.
    Paul

    1. Arindam

      Hey Paul,

      If it is a non-IM product, you can do what I did: a separate sales page for each, say Clickbank, Paypal, etc. Like I said, YMMV, so I think everybody should take a crack at Clickbank and see how it works for them. Some niches have more serial refunders than others, but more importantly, clickbank’s huge affiliate force is kinda hard to ignore! If your refund/chargegback rate does not exceed the threshold, then you would be in good shape I believe! You would perhaps want to closely monitor your refund rate during the first month and maybe tweak your product/salesletter accordingly, or quit clickbank, as you see fit. ;)

      Some clickbank alternatives you have are click2sell, paydotcom, payspree, etc; however I think you won’t get as many affiliates from these networks (even combining them all) as you would from Clickbank.

      Good luck!

  2. Alan Petersen

    ClickBank is trying to clean up it’s image especially if the FTC is sniffing around the marketplace.

    I doubt ClickBank’s infamous serial refunders could account for a refund rate higher than 15%. Even if you have a top-selling product refund rates of over 10% should concern the vendor so 15% is no problem for vendors publishing quality products ethically.

    The problem was the slew of crap on ClickBank the past few years. “Push button” software that makes you millions. Teenage girl makes millions, ex-stripper makes millions, hippie makes millions, etc. Some of those products had refund rates of over 50%!

    So I think it’s a good thing that ClickBank is trying to clean up things for the majority of ethical vendors who don’t have to worry about a 15% refund rate.

  3. Arindam

    Yep Alan, could not agree more, too much sleaze over there. It would be really nice for us affiliates if they have a cleaner marketplace; we don’t have to wade through 100s of junk products to find something worth recommending! ;)

    There are even “duplicate” products in the marketplace, though their quantity is not as huge. Wonder what would CB do with those.

  4. Roger Fischel

    I use both clickbank and paypal depending on whether I want affiliates or not. Sometimes I want to control the marketing without having to give away too much. I also find that I have more returns and chargebacks from affiliate sales than I do from my own direct sales. So ultimately, the answer is as always, it all depends…

  5. ManieE

    I think this will always be a problem for product vendors. you can’t satisfy everybody, not even with the best product!