EcommerceBytes-NewsFlash, Number 2345 - August 11, 2010     1 of 2

eBay's Top Affiliates Indicted for Fraud

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The U.S. government has charged two eBay affiliates with wire fraud in a case involving "cookie stuffing." eBay had filed a lawsuit against them and a third affiliate in 2008; that case is now on hold while criminal charges proceed. Shawn Hogan of Digital Point Solutions (DPS) - eBay's top affiliate in 2007 - pled not guilty in July and will appear before District Court Judge Fogel on September 9, 2010. Brian Dunning pled not guilty and will appear in court on August 19, 2010.

The government accused both men of "cookie stuffing," the act of depositing a cookie containing an Affiliate ID onto a user's computer without that user having clicked on an advertisement or link. (eBay uses cookies to track which affiliate - if any - to pay for driving traffic to its website.) The government charged DPS of purposefully creating computer code that prevented eBay's home page from loading on the user's computer screen.

The government also indicted another man, 28-year-old Christopher Kennedy of Nevada, for creating and selling a cookie-stuffing program called Saucekit. He pled guilty to one count of conspiracy to commit wire fraud and will be sentenced on November 1, 2010.

Shawn Hogan shot back against eBay and its employees in a recent blog post, accusing them of knowingly allowing affiliates to violate the terms of service of its Affiliate program, and stating he was coerced into buying an eBay employee expensive gifts. (Read more on the AuctionBytes Blog.)

According to the indictments, eBay paid Digital Point Solutions $10.5 million in compensation from the eBay Affiliate Program in 2006, and $5 million in the first 6 months of 2007; and paid $2.8 million to Dunning's company, Kessler's Flying Circus in 2006, and $2.5 million in the first 6 months of 2007, making it the number-two producing account in the eBay Affiliate Program behind DPS.

AuctionBytes was unable to reach Hogan, and his lawyer was on vacation this week. You can read Hogan's account of the case on the Digital Point blog.

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About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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