When merchants go bad?

[richard@imutual]

From time to time, we face a situation where a merchant fails to pay for otherwise-valid transactions - often because they've gone bust (this can also happen with intermediary affiliate networks too). So the question for any cashback site is: do we still pay the members? As imutual would effectively be paying out those members from shareholders' funds, it seems appropriate for me to air the subject here and find out what people think

That said, I personally feel strongly that we should always pay out, and that is the policy we've operated to date. The member has done nothing wrong in such instances and the onus must surely be on management to manage this risk and not be over-exposed to any one merchant. It will never be possible to protect ourselves 100% from merchant/network insolvencies, but I think it's important to maintain our image as a cashback site to be trusted by honouring all transactions in such instances

A recent example is Choices UK (in administration), where there are a handful of transactions which we're not going to get paid for. Fortunately, the amounts involved are trivial. Of course, we could face a more significant 'bill' if an entire network went bust. The most likely scenario for this is where we're promoting a popular lead-based (i.e. free) offers; and suddenly the merchant/network either becomes insolvent or refuses to pay due to poor lead quality. It's unlikely that legal action to recover the funds would be a practical option, so we'd have to take the hit. But I think that's a risk we can manage through a number of measures, such as enforcing per-member transaction limits and sometimes by offering <100% cashback for high risk merchants in order to build a 'contingency' fund.

Thoughts?

[kevinchess1]

Me thoughtas are similar to your
(Chrousus of 'Brownose from the bac)
It's not the memebr thought if a merchant goes bust#
but it's not Imutual fault either
TopcashBabes hav a 'Fare play' policy or something like that
Where they pay 50% in most cases
If thhe amount involved are minimal then pay them
If the amounts are substanial then maybe a poll?
(Yes, No, 50% payment)

Right that should put me in line for the 'Suck up of the year'

[richard@imutual]

One potentially tricky scenario might be where you have an offer where we didn't initially see any major risk of abuse, and so we didn't put any explicit controls in place. Or perhaps it was complicated such that by applying a blanket "Maximum X transactions per member" restriction we might have unfairly limited genuine members.

But one or more members take advantage of this and generate a large number of transactions that the merchant considers to be 'abuse' of the offer, and promptly terminates their relationship with imutual and refuses to pay for any outstanding transactions.

Should we still use imutual's funds to honour all transactions? Including those for the members who, arguably, caused the problem in the first place? I'd like to think we have some scope to withhold cashback from those members in such instances. Which of course, we do in the site T&Cs - we can suspend their accounts

[mike]

I like Kev's idea of a 50% payout where the member has made a cash outlay. If a free offer merchant doesn't pay out, I think imutual shouldn't payout.

[kevinchess1]

One's persons 'Abuse' is another person 'Advanced earnin Strategy'
A V good example of this would be the 'Compare insurance lonks' in the email
Everybody doin them is 'Abusing' them because they have no intention of getting the insurance
But all the time the merchant paying we turn a blind eye to it

[zulu17]

Agree that where there is no cash outlay by a member and no payment by merchant to imutual then sadly the member should receive nought.
Goodwill percentage payments where members have paid for goods then OK - but am wary of a fixed percentages its gives an expectation level to members that it is a right and if not able to be met - you actual lose members goodwill as they feel they didn't get their entitlement.
I would also draw a line between real goods and services/subscriptions/sign-up bonuses as I feel that cashback offers on these have always been more risky and less reliable payers and as such the member is effectively accepting that there is always a risk in those suppliers avoiding paying their cashback.

[richard@imutual]

I like Kev's idea of a 50% payout where the member has made a cash outlay.

I guess the question is: why not 100%? If imutual can afford it. After all, the member has done nothing wrong

[Richard Frost]

I think if people are doing an offer (paid or unpaid) if they are within the rules they deserve to be paid. It seems to me that, is fair and just. If it is possible to build up a fund from other sources as Richard has suggested then all well and good. However it is sometimes inevitable that companies will go bust or refuse to pay. Thats life! it would not be unfair for members to bear some of that burden as well in those circumstances. If the built up fund can afford 100% fine if not then payouts could be scaled accordingly.

[BeautifulSunshine]

I like Kev's idea of a 50% payout where the member has made a cash outlay.

I guess the question is: why not 100%? If imutual can afford it. After all, the member has done nothing wrong

I would be in favour of 100%. Makes us credible. Consequently we build a firm and loyal customer base.

[mike]

I like Kev's idea of a 50% payout where the member has made a cash outlay.

I guess the question is: why not 100%? If imutual can afford it. After all, the member has done nothing wrong

A 50% payout shares the loss - makes it 'mutual'.