comments Written By: Scott Jangro
July 7, 2008

Commission Junction Adware Class Settlement

cj.jpgKellie over at Affiliate Fair Play has published the documents of a proposed settlement agreement in the class action lawsuit against Commission Junction for their failure to sufficiently monitor and prevent Publisher Code of Conduct violations by affiliates using “malicious software” to hijack commissions.

The plaintiffs in this lawsuit are two current and former members of the
Commission Junction (”CJ”) Network who entered into either a publisher service
agreement (”Publishers”) or an advertiser service agreement (”Advertisers”) with the
defendants. They contend that the defendants did not do enough to monitor the CJ
Network for the use by third-parties of software programs that do not comply with CJ’s
Publisher Code of Conduct and are intended to steal or divert commissions from
Publishers and Advertisers on CJ’s Network (”Non-Compliant Software”) or to monitor
for or prevent third parties from engaging in the theft or “hijacking” of commissions from
Advertisers and Publishers on CJ’s Network. They further contend that the Defendants
failed to make sufficient disclosures regarding the existence of such Non-Compliant
Software and commission theft, resulting in losses to both Advertisers and Publishers
on CJ’s Network. As a result, the plaintiffs believe both Advertisers and Publishers
suffered losses on the CJ Network.

The defendants in this case are ValueClick, Inc., and its subsidiary, Commission
Junction, Inc., and former subsidiary, Be Free (which has since been merged into CJ).
Defendants vigorously deny the allegations in these lawsuits. Defendants further
contend that Plaintiffs’ claims are barred by the express terms of written contracts
between the Parties, that they owe no legal duty to Plaintiffs to monitor for or detect the
use of Non-Complaint Software or to restore any commission payments made by
Publishers or Advertisers that were made due to third parties’ use of such Non-
Complaint Software or otherwise, and that CJ’s monitoring and compliance systems
satisfy any legal obligations they may have. Defendants also deny that these lawsuits
could be certified for trial as one or more class actions in light of severe manageability
problems that would exist.

The settlement stipulates that Commission Junction will pay $1 Million to Publishers and Advertisers (70% to publishers and 30% to advertisers) and will shore up their audit process and tools to prevent such malicious software publishers from continuing their activities unchecked.

The agreement goes into some fine details on what CJ should do to improve the Network Quality practices, including reporting that detects clicks happening within 5 seconds of another click by the same user, typically indicating that some software was involved.

These are auditing practices that, in my opinion, all networks should have in place, and not stopping at 5 seconds. Understanding which affiliates, through whatever practices, are overwriting other affiliate clicks at high rates is just important information to measure and understand. It goes way beyond what’s legal into where the value lies in the overall affiliate base.

As several people have already stated in their coverage of this news, “it’s not about the money,” and I am in agreement with that. Have you ever seen a class action suit where the plaintiff class was compensated at a level that made much difference? According to the settlement documents, affiliates will be compensated in a pro-rata fashion based on the percentage of commissions that they produced in the entire CJ network since April 20, 2003.

Some of the publishers who stand to benefit the most from this settlement are loyalty and coupon publishers who due to their own business models overwrite plenty of affiliate cookies in their own right. That’s not at all to categorize these legitimate publishers with those who use malicious software for collecting commissions they don’t deserve. It exemplifies the channel conflict that exists in the affiliate marketing industry, conflict that could be better understood by the same auditing practices that can detect the bad guys.

The fairness hearing for this settlement is scheduled for January 2009. CJ and even the other networks would do well to implement these new tools and processes well before that date in order to take a good hard long-overdue look at the value they’re getting out of their whole publisher base. Malicious software is just a piece of the whole picture of publisher value.

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