Have you ever been hit by a fake anti-virus alert on your computer? Do you know someone who has? More importantly, have you ever made money off those kinds of offers?
The chances are that the number of people replying in the affirmative to these questions is disappointingly high. Fake AV software is perhaps the most visible of fraudulent activities online: it is incredibly widespread and it is totally indiscriminate who it targets. It’s amazingly lucrative. And because it hits everybody sometime, it impacts on the entire performance marketing sector by eroding trust in online transactions and providing the ignorant with yet one more reason to bad-mouth affiliate marketing.
But this week we can bring news of progress in the fight against the scammers, with extra color: police raids in Moscow, illicit painkillers sold by the millions, and 600% ROI on affiliate programs.
Last week, Russian police raided the Moscow offices of ChronoPay, a huge player in the online payments business that appears to be heavily involved in fake AV and rogue online pharmacies. ChronoPay’s co-founder, Pavel Vrublevsky, was arrested in June and, in combination with the latest raid, this appears to be part of an international police crackdown on the industry. These investigations are starting to give us a remarkable view into the anatomy of the scams and perhaps, clues as to how we can help fight it in the future.
The interesting thing for those of us not involved is that the entire business runs on an affiliate network model. Fake AV affiliate networks pay an average of $25-$35 for every credit card payment. In turn affiliates can buy installs of the fake AV software from Pay-Per-Install networks at between $75-$90 per thousand. At an average conversion rate of about 2% on installs, an ROI of up to 600% is achievable, so it’s easy to see how unscrupulous affiliates can have their heads turned.
ChronoPay is just one payment processor, but it seems that that they were actively supporting the infrastructure of at least some of the fake AV and online pharmacy operators. According to Krebs, not only was ChronoPay running technical and customer support desks for a variety of fake AV software, but their computers were also supporting the operations of Rx-Promotion.
Rx-Promotion is infamous for offering controlled substances to buy online without prescription: addictive painkillers such as Vicodin, Percoset and Oxycontin; so it’s hardly a surprise that law-enforcement agencies worldwide have taken an interest.
The hope is that the arrest of Vrublevsky and the raid on ChronPay will have significant short-term effect upon the revenues of various black-market sectors, but given the extreme profitability that is on offer, nobody should be under any illusion that the business won’t bounce back quickly.