I have an article over at our sister blog, TopLeadGenerators, that is getting a lot of hits and generating some e-mails back to me disagreeing with some of the benefits I listed.
Some of the feedback makes a lot of sense. There are definitely drawbacks to relying on sales leads via co-registration agreements. Here are five that I thought of:
1. Too Many Leads
A co-reg that brings in thousands of leads per day is a sign of trouble. Leads that come in big bunches are usually unqualified and unproductive. Getting 5,000 new leads for your company in one day sounds too good to be true ... and it usually is. The co-reg site could be illegally harvesting the IP addresses of every visitor, for example, or sending files of old names.
A good legitimate co-reg with normal traffic should give you hundreds - not thousands - of leads per day. Check for dead names and multiples - then "de-dupe" the rest. ("De-duping" is the process of eliminating any names that are already on your list.)
Before rolling out with a big purchase of leads from a co-reg partner, test small batches to make sure they work for you. Protect yourself by including a cap in your initial contract. You might, for example, draft the contract to say, "Remove this offer after 2,000 leads are acquired" or "Client agrees to spend no more than $3,000 on leads."
2. Incentive-Based Affiliate Programs
Avoid co-reg sites connected with incentive-based affiliate programs. 
If an affiliate can earn gifts or commissions for bringing in a large number of leads, they might be inclined to set up a bunch of fake e-mail accounts and sign them up on hundreds of lists. This translates into your paying for a bunch of bogus e-mail addresses. Affiliate programs where they earn free telephone minutes for every offer accepted and every friend they sign up are the worst. The leads are worthless. Those people don't want your offer.
3. Pre-Checked Boxes
Some co-reg services use pre-checked sign-up boxes on their confirmation pages. Many find this acceptable, but I do not. Pre-checked boxes are deceptive. The site visitors are clearly not taking action to opt in to your e-mail list. The permission to receive your offer is passive, and they will end up getting e-mail they probably won't remember signing up for ... thus creating the presumption of spam. You don't want this problem. If you're like me, I take deliberate time to un-check all of the boxes that sign me up for unwanted "free" stuff when I'm registering something.
You'll get fewer leads with unchecked boxes ... but the leads you get will be better quality. The spam complaints and potential black listing of your ISP are not a fair tradeoff for the additional leads you'll collect.
4. Vague Descriptions
Make sure the description that accompanies your offer on the co-reg site is very specific. You are paying for each referral, and you don't want to generate leads that are simply not interested in what you're selling. By providing a good description, the overall quality of the leads will be higher, even if the number of referrals is lower. If they don't understand your offer, fix it so they do.
5. The "Select All" Feature
Be wary of co-reg services that use a "select all" feature that allows visitors to subscribe to all the offers in one shot. This is often seen when a co-reg host offers dozens or hundreds of lists in a solicitation. Chances are that someone who has opted to receive hundreds of e-mail offers is not going to have time to read any of them.
Stay away from these "opportunities." Remember, even if visitors to the site take action and click on that "select all" box, such multiple registrations will create the presumption of spam when they forget they signed up for them. And the presumption of spam can be just as dangerous to you as spam itself.
You may have other potential negatives, so feel free to comment and add them to the list.
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