> Thank you for the details. It seems I've been living under a rock and this is new to me.
You haven't been living under a rock. The affiliate marketing industry is hiding under a really big rock :)
> Just to make sure I understand ... the way this used to work is that you acted as an affiliate for another site (e.g. aff). They would pay you a commission for signups you generate. You then market on sites such as Facebook and get the affiliate fees.
That is a good summary. An example is eHarmony. They paid me $4.25 to fill out a signup form on their site (first name, last name, email, gender, interested-in, location). I created a web site to tell people about them and then sent traffic to the site from various sources (Facebook, Display Ads, Search, etc.)
You don't always have to create web sites in between the ad and the advertiser, but often it helps because you can "seal the deal" by convincing them about the product.
> As an affiliate, one is sort of a marketing firm for the web site. However, people abuse this setup by misleading clicks/signups.
People abuse it through many different ways. The most notorious is Jenny's Diet Blog. An affiliate marketer made a fake blog about "Jenny" and her diet "miracle", espousing the ease of losing weight through acai berry and colon cleaning product free trials. The affiliate was paid ~$40 per signup for each.
The abuse is through misleading ads, outright lying on web pages, scammy merchants (they are just as bad) and more.
> Is this an accurate summary?
You definitely are on the right track.
> Edit: Also, how does one learn about these affiliate programs? Word-of-mouth?
There are a lot of affiliate networks that host the offers, track performance and handle payouts. They provide ways for affiliates to discover things to promote and also serve as a trusted source of payment.