Quick Answer: Most affiliate programs have commission hold periods that cover their refund window. This means that if any refunds happen, they’re simply deducted from your balance before being paid out. Affiliate programs will never claw funds directly from your bank.
As an affiliate marketer, you’re paid commissions each time you successfully manage to generate a sale of a certain product or service.
It’s a pretty neat deal & that’s why we love teaching it here at Commission Academy.
But what happens when it comes to refunds? How do refunds work in affiliate marketing?
As an affiliate, do you still get to keep the money, even if the customer refunds the product or service? Or do you have to pay it back?
If that’s what you’ve found yourself curious about, you’ll be glad to know you’ve landed in exactly the right place to find out the answers.
In this blog post, I’m going to uncover everything you need to know about affiliate marketing refunds.
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Affiliate Program Refund: Do I Have To Repay It?
In affiliate marketing, if a customer requests a refund on a product that you referred them to, then that commission will be revoked.
That’s because affiliate commissions are paid out on successful sales & technically if a refund happened, there was no successful sale.
The company you were promoting didn’t earn anything, so you don’t get paid anything.
However, different affiliate programs deal with refunds in different ways.
For example, many affiliate programs put a delay of around 30 days on your commissions before they become eligible to be paid out.
This period usually covers the company’s permitted refund window & means that if a customer requests a refund, the funds from that sale are still in your account ready to be returned.
Other programs, however, may pay out your commissions sooner, but may simply put your account balance into the negative, should you get a refund.
In these instances, you won’t be asked to return the funds but it will mean that you’ll need to earn the value of the refund back before going into a positive balance again & being able to cash out any future commissions.
Of course, if you were to go too deep into a negative then the company may close your affiliate account as they may assume you’re committing affiliate fraud.
This is where affiliates themselves attempt to buy products through their own links, get the payout, and then request a refund to “double their money”.
But unless you’re promoting something really bad, it would typically be pretty rare that you’d find yourself getting an excessively high number of refunds.
Amazon Affiliate Returned Items Example
To give you an example of how it works in practice, let’s take a look at the Amazon Associates program, which is one of the world’s most popular affiliate programs.
The hold period for Amazon Affiliate commissions, also known as the Amazon Associates program, is typically around 60 days.
This means that commissions earned in a given month are usually paid out approximately 60 days after the end of that month.
For example, commissions earned in January would typically be paid out at the end of March.
This hold period accounts for the time needed to process returns and cancellations, as Amazon allows customers to return products within a certain timeframe.
If a customer returns a product that generated an affiliate commission, the commission for that sale is deducted from the affiliate’s earnings.
And because these funds won’t have yet reached your bank account, nothing will have to be clawed back from your bank – the amount will just be deducted from your affiliate balance.
What Are Affiliate Chargebacks?
Alongside refunds in affiliate marketing, you also have something known as chargebacks. These are much more than refunds & should be avoided at all costs.
You see, a refund simply involves a customer deciding they no longer want a product for whatever reason & asking the vendor for their money back.
That’s fine.
However, a chargeback is when a customer files a report directly with their card issuer & claims that they have been scammed.
These can be extremely damaging for vendors as not only do they affect their reputation with the merchants but they can also come with heavy fees, too.
As a result, while a high refund rate isn’t typically seen as the worst thing in the world in affiliate marketing, a high chargeback rate, on the other hand, is a huge problem.
In fact, even just so much as a few chargebacks in a couple of weeks could see you getting kicked straight out of an affiliate program.
In terms of what happens when you get a chargeback as an affiliate, it’s similar to what happens when you get a refund. The key difference, however, will be how your affiliate program manager reacts.
You’ll likely receive a notification warning you that a high chargeback rate will see your account terminated.
Thankfully, though, I explained how you can prevent chargebacks in affiliate marketing here.
Can Affiliate Marketing Make You Lose Money?
A common concern that new affiliate marketers have is that funds will be clawed back from their bank account in the event of refunds, but that’s not the case.
In fact, unless explicitly stated otherwise, no affiliate program will have the functionality to claw funds from your bank account; even if they wanted to.
They can make deposits, but that’s it.
So if you’re faced with a string of refunds in affiliate marketing then the absolute worst that can happen is your account will get terminated.
You won’t have to pay anything back out of your own pocket.
But if you’re reading this blog post because you’re considering trying out affiliate fraud, then obviously that’s a different ballgame altogether.
If you’re looking to specifically buy things through your own affiliate links & then refund them to “double your money”, think again.
Although it may seem like a harmless, risk-free behaviour, it’s most certainly a crime and it will be very easy for affiliate managers to detect those types of behaviour.
But the bottom line here is that if you’re a genuine affiliate marketer who’s looking to earn commissions by recommending products you love then you’ll have absolutely nothing to worry about.
And if you’d like to learn how to do exactly that, be sure to sign up for our free training before you leave.
Of course, if you happen to have any further questions or comments, don’t hesitate to leave them below.
