Wells Fargo Smackdown on Continuity and Rebills – What’s Ahead in CPA
Thanks to Ruck at Convert2Media.com’s blog post for alerting the industry about Wells Fargo departing the rebills/continuity/negative option billing.
Make sure to read the entire story on Ruk’s blog on what is happening with continuity in the performance and affiliate marketing space.
There is also some chatter on WickedFire Forum, you can read that here.
Continuity, membership, subscription, auto-ship, auto-renew, call it what you like, it is something that needs disclosure.Â I have suspected for some time that issuing banks would correct this option with additional disclosure, but the FTC beat them to the punch.Â Last month’s update to the Guidelines for Online Sales and Blog Post/Testimonials has made it crystal clear that the performance marketing slice of the online marketing industry is under a microscope.
For those who are not aware, a number of campaigns in the CPA Networks have been gone dark, and more will be modified to either make them more transparent to the end user or modified from a free “anything”, to a more traditional direct sale approach.Â Last week, Wells Fargo announced to it’s transaction processing partners that they no longer be in the business of taking transactions involving rebills, continuity, and/or a negative billing option.Â Essentially this means that any card issued by Wells Fargo, and I am assuming their recent acquisition Wachovia issued cards as well, will no longer be able to be “dinged” month after month automatically by the continuity fairy.
CreditÂ issuing banks in the US are seeing their chargeoff rates increase monthly.Â This combined with increasing costs of servicing specific types of credit card transactions, such as auto-rebilled transactions, is forcing issuing banks to reconsider which lines of business actually make it the best margins.Â When you get 20 people per 1000 transactions complaining about something to a live agent, the costs become prohibitive.Â When you do hundreds of 1000′s of transactions daily, well the numbers just don’t make sense to continue servicing them.Â This is what I believe is at the heart of the move.
As I write this today, I believe this is just the tip of the iceberg of additional jettisoning of high risk, card not present (CNP) transaction types.Â I fully expect to see Visa weigh in with additional category shutdowns as they have instituted recently on the Acai Berry products, as well as transactional type smackdowns, such as the negative options.Â The nature of the Acai Berry offers smacked of an alleged scam, which included multiple subscriptions and other offenses.Â (NOTE: read this Acai Berry Users Complaint board post to see how many acai berry users are fighting back against these types of predatory sites).
What publishers need to be concerned about is the ability of the networks and their advertiser partners to either have already in place alternative payment methods, or how quickly they will be able to adaptÂ solutions to newer payment models that do not include risk free trials or negative options.Â In addition, publishers should be more vigilant than ever of the campaigns they promote simply because when something affects the advertiser’s ability to process orders, that directly affects their ability to pay the networks who will in turn pay the publisher.
It all falls downhill.Â Look for advertisers (actually look for networks) who are doing their own due diligence on advertisers.Â You want a network who works closely and directly with an advertiser, who can help them avoid industry issues and point them in the direction of partners they can trust, particularly for processing.Â Work with your AM’s to get complimentary access to offers you want to run and then monitor how they treat their subscribers.Â This is something that only you as a publisher can do and communicate to your audience. (and according to the FTC should be disclosing).
So the sky isn’t falling, just Wells Fargo’s continuity business which is impacting a few transaction processors who do quite a good amount of business in the CPA Biz Opp and Health and Beauty space.Â The sky does have some clouds and it is going to rain on more than a few publishers and advertisers (and CPA networks who were too highly vested in these types of offers) for a few months until Visa and MasterCard, Discover and American Express all weigh in on their versions of continuity/rebilling, and what is and isn’t acceptable.Â Once the dust settles, the winners will be the ones who test religiously and develop multi-channel targeted landing and sales funnels.
The publishers who work closely with those advertisers (and their networks) more than likely won’t be caught with their shorts down (or a smack down).