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How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

businessinsider.com

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Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#81

Post by rgovind »

AJ007 wrote: post #23
AznHisoka wrote: post #16

Earlier quoted context omitted.

Actually there's a bit of truth in it. The dirty secret is that 90% of affiliate revenue is generated by coupon sites. For the most part retailers are giving away money that they probably would've generated any way w/o the affiliate.

The dirty secret is that 90% of e-commerce affiliate revenue is generated by coupon toolbars. Its like what Shawn Hogan did, except it involves every single e-commerce affiliate program instead of just one.

I run a website/app where I drive traffic to ecommerce companies(Mostly fashion companies). I am looking at various affiliate networks now. Are you saying that I am most likely not going to make much money unless I do a couponing website?

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#82

Post by biot »

unreal37 wrote: post #53
corresation wrote: post #47

Earlier quoted context omitted.

I also tend to believe that these companies sanctioned this activity until they were against it. Why? It provided absolutely no value to them. Actually worse, it cost them affiliate fees on sales that rightfully would have been affiliate fee free. There is no scenario where it makes sense that eBay (edit: wow originally wrote Amazon) would endorse this. they invite one of the guys to a private dinner where he is the…

So eBay is cutting him a check for $1 million to $2 million per MONTH. This equates to $2 million to $4 million a month in profits for eBay that they share 50% with the affiliate. When his traffic drops, the affiliate manager calls him and asks to do whatever it takes to get his numbers back up. It looks bad on her. "Why is affiliate revenue down 20% this month?" her boss asks. She doesn't even CARE that it's crappy…

The problem is that, unbeknownst to them, consumers received a stuffed cookie from eBay from some random website having no awareness of anything regarding eBay at the time. It's only because these consumers just so happened to visit eBay on their own initiative within 30 days and performed specific activities that an affiliate payment was generated. Had these affiliates not even been involved, there would be no change in the behavior of the consumers; they would have visited eBay anyways and eBay would therefore not have had to pay out any commissions.

I agree with the rest of your analysis. Someone who was incented according to affiliate activity likely did encourage this, even if they suspected or had knowledge that it wasn't above board.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#83

Post by tptacek »

Proleps wrote: post #37
rayiner wrote: post #29

Earlier quoted context omitted.

Tricking people for profit is the definition of fraud. It says a sad thing about the industry that shady practices like that are considered important enough that it would be "scary" to have to abstain from them.

> Tricking people for profit is the definition of fraud. This would make 90% of all applications/websites fraud. Most free(gratis) Windows software tricks you into installing spyware & toolbars. Almost every app on your phone tricks you into giving away personal data. Almost every website tricks you into being tracked across multiple websites.

He didn't make that up; he just summarized it. The elements of fraud are (a) a false statement, (b) intentionally made, of (c) a material fact that (d) someone reasonably relied on and (e) was injured (usually, financially) by.

In other words, "tricking people for profit" is fraud. The Internet did not obsolete the crime of fraud.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#84

Post by hollerith »

thetrumanshow wrote: post #12
rwmj wrote: post #5

More accurate to say to "put two fraudsters in prison". Hopefully they'll keep on putting fraudsters in prison.

I agree, but the line that defines fraud is scarily unclear, IMO. Should the Airbnb founders be sent to prison for spoofing interest in Craigslist ads and breaking their TOS? If the consensus shifts to yes, then our industry will become a very scary place to invest time and energy.

A big difference between that and the original story is that Hogan and Dunning defrauded a single entity out of millions of dollars, which of course gives that single entity a strong incentive to sic auditors and private investigators on the fraudsters and push for an indictment.

Also, the US legal system takes very seriously it role in setting precedents and has a strong commitment to following precedents -- specifically to make the law more predictable to folks like us. There're probably a lot of preceding criminal cases around affiliate-marketing fraud, and none for the kind of shenanigans attributed in these comments to AirBnB.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#86

Post by craigching »

unreal37 wrote: post #66
corresation wrote: post #56

Earlier quoted context omitted.

Saying "one rogue account rep sanctioned this" (which even that I deeply doubt) is quite a world removed from saying that the company sanctioned it, which was your original statement.

I'm not saying the rep was "rogue". I'm saying eBay set up their affiliate program to encourage affiliate sales "no matter what" and then in 2008 they started caring for quality of affiliate links when they didn't care before. Let me try this another way. There are companies out there that pay salespeople a percentage of total revenue they get customers to buy, regardless if the order is profitable for the company. S…

Right, I agree with you. It's easy to imagine an affiliate rep who is incentivised by affiliates doing well, i.e. they get paid based on affiliate sales. You can even imagine some ebay affiliate reps being "ok" with a description of how they're generating their hits because they're incentivised by the affiliates doing well. Until someone upstairs figures out what's going on. Then, of coure, the affiliate rep is completey clueless about what happend and is shocked that someone would do this!

What a scam both ways.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#87

Post by craigching »

kybernetyk wrote: post #58
corresation wrote: post #47

Earlier quoted context omitted.

I also tend to believe that these companies sanctioned this activity until they were against it. Why? It provided absolutely no value to them. Actually worse, it cost them affiliate fees on sales that rightfully would have been affiliate fee free. There is no scenario where it makes sense that eBay (edit: wow originally wrote Amazon) would endorse this. they invite one of the guys to a private dinner where he is the…

> Why? It provided absolutely no value to them. Actually worse, it cost them affiliate fees on sales that rightfully would have been affiliate fee free. Well, it provided value to ebay's affiliate manager who could boast about how much revenue his affiliate program drives in. In a big corporation there are many factions. :)

Exactly.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#88

Post by driverdan »

Matsta wrote: post #27

Ahh this brings back some memories. The articles mentions the guy who made the cooking stuffing software. He was pretty active on a private part of a forum I'm still part of. Anyway eBay went after the forum as well, and promptly deleted his account and all the threads mentioning eBay. They also moved their servers offshore and deleted pretty much every thread that mentioned eBay in it. I do remember he wrote a massi…

Said too much? Everything you said could have been learned by a lurker on Black Hat World.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#89

Post by driverdan »

I came really close to getting into cookie stuffing back in its heyday. I'm really glad I didn't. No one gave a second thought to it 5 years ago. I never once saw the words "fraud" and "cookie stuffing" on the same page.

Around that time I worked on finding ways to do untraceable cookie stuffing. Bouncing people through SSL to kill the referer, using Flash, etc. I even found a security hole in IE that gave me access to cross domain iframes. That was killer because you could load another site in an iframe then use JS to click an affiliate link or manipulate the page, making it appear completely legit.

Luckily it never went past research. I registered a domain and planned on creating a cookie stuffing service but never finished it and never did any actual cookie stuffing.

Re: How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison

#90

Post by SoftwareMaven »

unreal37 wrote: post #41
Matsta wrote: post #27

Ahh this brings back some memories. The articles mentions the guy who made the cooking stuffing software. He was pretty active on a private part of a forum I'm still part of. Anyway eBay went after the forum as well, and promptly deleted his account and all the threads mentioning eBay. They also moved their servers offshore and deleted pretty much every thread that mentioned eBay in it. I do remember he wrote a massi…

I also tend to believe that these companies sanctioned this activity until they were against it. A year after they claim to have started investigating it, they invite one of the guys to a private dinner where he is the only non-eBay employee in attendance, and treat him like a king. Its a contradiction. Very interesting stuff. That must have been a fun forum at the time, when easy money was to be made like this. Than…

If they were investigating him, they wouldn't want him to stop the illegal behavior until prosecutors had a good case. If they turned off the cookie stuffing, it may have prevented the criminal case which would make the civil case harder.
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