If you run an affiliate program, be alert! There's a new scam around that could cost you not only lost revenue, but also your merchant account.

Let me start from the beginning of this sad and sorry tale ...

I've had an affiliate program for the past two years to sell my writing courses. It's been puttering along quite nicely with more than 100 affiliates. And while only a few are making significant sales, that's the way most programs work, isn't it? Twenty percent of your affiliates bring in 80% of your sales.

Recently, one of my newer affiliates started putting through regular sales; at first two or three a week, then four or five, then one every day. I was delighted!

Wow! I thought, if I could find out how to encourage all my other affiliates to make these sales, the sky's the limit! And off I went into a little fantasy world where I multiplied the number of affiliates by the number of sales a day and the profit I was making and after a year I'd have ... Well, I'm sure you've indulged in the same daydreams, haven't you?

Fast forward to the Friday before Christmas, when the postie arrived and left two letters from my bank ... Muttering to myself about the waste and why couldn't they put both letters into one envelope, I opened the first expecting to find a bank statement, only to discover to my horror, one of those "please explain" letters.

It appeared that one of my credit card transactions had been queried. I've had my merchant account since 1998 and in all that time, have had only two previous letters like this (and both were resolved when we found that the queries were the result of buyers not being aware of my business name).

Feeling somewhat less than Christmassy, I opened the second letter to find that it was yet another "please explain." Two in one day after two in seven years was a real shock!

Some quick investigating unearthed the culprit: my active new affiliate was running a scam using stolen credit card numbers! He'd put an order through using his affiliate link and the stolen credit card. My automatic program sent out the download instructions to the email address he entered, and I received notification of another sale by an affiliate. There was no reason to be suspicious or concerned, so I paid him his commission at the end of the first month.

And I not only lost that money, I now also risk losing my merchant account.

I've had a number of conversations with my bank, and it seems that if 5% of any month's transactions are queried for any merchant, alarm bells go off for the credit card companies and they make life difficult for the banks. And we poor merchants are at the bottom of this food chain.

Be Suspicious If:

1. The order is placed through an affiliate from any of these countries: