Why We Lowered Seller Commission Rates
Let me get the unpleasant news out first. We have lowered seller commission rates from 65% to 60%. That being the case we still offer 24 hour payouts (as long as the minimum credit amount is reached) and now we aren’t charging sellers chargebacks–meaning if a user buys something from a seller and then reverses that charge the seller will still get paid. We won’t deduct money we lose from the seller. In the end the seller gets paid for the work.
Let me explain how we came to this decision.
How and why we decided on this
A few days ago we published a post about a recent fraud incident. This was our first experience dealing with fraud and chargebacks. After it happened we realized we didn’t have a policy on what to do when someone purchases content from sellers and then reverses the charges on us. When this happens sellers get paid by us, but we end up with no money since the buyer reversed his credit card purchase from us. In this way the buyer gets “free” stuff.
As you can imagine continuing to do business like this is not a sustainable formula. Luckily we haven’t had to deal many chargebacks, but if enough people did this then ELM would go out of business. Chargebacks are also one of the reasons why companies like Paypal and American Express refuse to process any payments for adult businesses. The adult industry has a higher chargeback percentage and is considered more risky than other industries.
We ended up with two different options:
- Option A: Keep the commission rate the same (65%), but pass on chargeback costs to individual sellers
- Option B: Lower the commission rate (60%), but don’t charge sellers any chargeback costs
The reason for the 5% rate change in option B is to cover the costs of chargebacks we receive so we don’t have to pass them on to sellers.
Before we made our decision we wanted to get feedback from our sellers so we emailed them for feedback on these two options. While some favored Option A, the majority of them supported the Option B to not pass on chargebacks to them.
Here’s specifically what some of our sellers had to say:
Option B buyers are buying content mostly so it’s not fair to purchase something then want a chargeback but already watched and probably enjoyed the content.
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I’m sorry to hear about this incident, it’s a shame that people do such greedy things with no regard whatsoever for how it may affect others.
I prefer option B, since I feel that if there was a chargeback, I would rather have been paid for the work I did.
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First off, I’m sorry about the chargeback situation, if only us in the adult industry had a penny for every time we get ripped off, we’d be retired by now, eh?
My vote is option B, raising commission to 40%, as it would keep provider/buyer communication a little smoother.
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Option B, but I’m not really crazy about either.
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I vote option a. because it wont happen all the time. Whereas if we choose option b when and if it happens, that will be a constant drain. I’d rather pay for me and mine than everybody else on the site.
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I think that once they review the product and give us the credits, they should not be able to do chargebacks.
Also, there should be a number system of how many time the buyer has done a chargeback.
I would go with Option A—-
I prefer option B. If I never see the money, I won’t miss it. Thanks for the heads up, and the consideration.
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I don’t really know much about things, but the way you explained was just about perfect. So, you get extra points just for that. In my personal feelings, most people want things to be as automated as possible to make their lives easier. I feel that if a company handles the messy work, like chargebacks, it will offset many problems. Though most won’t like the higher rates on your end, I think most will understand that the reason for it is valid and put into place to keep all of us safe money-wise. So, based on how you explained things for all of us Sellers, I am fully supporting option B.
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Option A: Passing on Chargebacks to Sellers staying at 35% commission level
Sorry to hear about this incident. I love the way ELM is progressing so I wish the best of luck whatever way you have to choose.
Personally, I’d rather take the risk of an occasional chargeback. I don’t want my commission decreased.
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I think we should have the choice, like take 40% as a protection on chargebacks, or still have the 30% with the chance of a chargeback
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hey there, i would prefer option B with no chargebacks
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I like option B. I would be willing to pay the extra percentage, rather than deal with the hassel of randomly loosing credits. I think this way would be for more affected, than dealing with each issue on an individual basis.
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I think option B is the best way to go.
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I’m definitely for option B. Us losing an extra 5% isn’t such a big deal but none of us are on ELM because we just love getting naked for free.
I was on another site where the girls had to cover chargebacks and even though I was doing very well on there, I quit after about 6 weeks because I was so sick of chargebacks. And I know a lot of others who quit for the same reason.
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I choose option B
I def prefer to get a bit less commissions from my jobs but know I m not in risk of say, selling my panties, send them to the seller and the guy asks for a full refund… Not fair at all.
So I think option b makes more sense.
I have my own site n I was a victim of an unfair refund ( I like to call that scam) and it wasn’t fun..
This way if u get a bit extra commission that money can go to cover the chargebacks, I think it s more fair.
I heard some sites block users who make chargebacks , u might see it as loosing a potential business but believe me, guys who do chargebacks are freeloaders looking for free porn, they end up with the porn n their money back lol so….
Hope my opinion is useful
Conclusion
Based on the feedback we received and our internal discussions we decided to go with Option B. The biggest reason being we don’t want sellers to ever have to deal with the chance that they might not get paid for their work. It makes for a bad experience.
It’s natural to assume that of course we would like Option B as we get to make more money from the sellers. The truth is we do make more money, but that extra 5% helps us cover the costs of current and future chargebacks without having to pass that cost on to the sellers.
We’re not here to take advantage of sellers. Without sellers ELM couldn’t exist. There are cheaper places to sell content or you could sell content on your own. If you feel those options are better for you then we can’t stop you. Our mission is to provide more than enough value so you feel that these rates are justified. Even more important to us we want to be open with our users and explain why we do what we do even if they might not agree with our choices.
We would love to make everyone happy, but unfortunately that’s not possible. In the future as we grow we will continue to take into account the feedback we receive and continually improve our processes and procedure.
We say it often, but we mean it, let us know what you think.
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