Here we describe a change to how SubscriptionBoss handles refunds of affiliate sales. It fixes an issue whereby the affiliate would still be paid even if the sales were refunded. It is arguable whether this was a bug in SubscriptionBoss or in Infusionsoft. The good news is that with SubscriptionBoss 1.44.1 the Infusionsoft affiliate commission calculation is bypassed and hence commission is no longer added.
Refunds and Clawbacks Terminology
Both refunds and clawbacks result in a removal of funds from the vendor’s PayPal account and a credit to the buyer’s account. PayPal transactions fees are also refunded to the vendor. The difference is that a refund is initiated by the vendor and a clawback is initiated by the buyer (or the buyer’s bank).
SubscriptionBoss Handling Of Refunds and Clawbacks
SubscriptionBoss handles refunds and chargebacks slightly differently; it always applies a “Refund” or “Chargeback” to the infusionsoft account that matches the payment and also adds a debit to affiliate account that balances any affiliate commission shown on the original order. So far so good. This leaves the invoice as unpaid with the balance outstanding with no affiliate commission payable.
However, then the difference between refunds and chargebacks is made clear. With the refund, a credit is added, this offsets the original charge and hence leaves the balance as zero. This approach is a standard one in double entry accounting. So on a refund, we have 4 entries: a charge, a payment, a refund and a credit that result in a balance of zero. On a chargeback no credit is added and hence the invoice remains as outstanding. The vendor then needs to contact the buyer to find out whether the chargeback is a real dispute or is a reversal due to their lack of recognition of the transaction.
Infusionsoft API
For all payments, refunds, chargeback and credits, SB originally set the Infusionsoft API parameter, bypassCommissions to false so Infusionsoft can calculate commission as required, whether that normal is positive, negative or zero.
Note that SB is just asking Infusionsoft to calculate commission, it is Infusionsoft that is calculating the commission. For payments, refunds and chargeback Infusionsoft calculates commission correctly. However for credit transactions Infusionsoft calculates a positive commission and hence the affiliate is showing an amount owed on the ledger. This is not what we want: to pay out commission on sales where we have refunded.
I would argue that this is a bug in Infusionsoft: it should be calculating the commission for a credit as zero (IMHO).
Bypassing Commissions On Credits
We got around this in SB fairly easily by setting the bypassCommissions value for credit transactions to true. This will cause the Infusionsoft commission calculation NOT to run, and hence no affiliate commission is generated. Of course, the bypassCommissions remains as false on the refund/chargeback transaction as we want Infusionsoft to clawback the commission on the sale.
Example Of A Commission Clawback
First look at the initial order which shows a 20% affiliate commission.
Then look at the order after the refund. This shows the commission clawback and a total commission earned of zero.
Finally look at the affiliate ledger that shows the commission and the clawback.
Thanks for the update!