Business Insider has an interesting and in-depth article about the ongoing legal cases that could land eBay’s two biggest affiliates in jail soon on charges of wire fraud.
If you’ve been in the online marketing industry for a while, you may recognize the names Shawn Hogan and Brian Dunning. They’re the two affiliates that eBay and the FBI started pursuing in 2006 after suspecting that they were earning millions while violating eBay’s affiliate terms of service.
According to court documents, Hogan made an astounding $28 million in affiliate commissions from eBay, and Dunning made $7 million. One way they did it, according to the FBI, was by using widgets that stuffed eBay tracking cookies in Web browsers.
The two widgets spread themselves far and wide, as amateur bloggers and web page creators installed them to look at where their traffic was coming from. Hogan’s widget stuffed 650,000 eBay cookies, according to eBay’s civil complaint against him. Dunning’s widget stuffed 20,000.
The obvious problem was that neither widget did anything overt to encourage people to buy stuff on eBay. Hogan and Dunning got paid by coincidence. So many random users were carrying their cookies that some of them inevitably ended up on eBay.
The article goes on to explain how eBay uncovered the cookie stuffing, and details some of the FBI’s discoveries when the agency served warrants at Hogan’s and Dunning’s homes. The two men both told the FBI that eBay employees — who were happy with how much traffic and sales the widgets were sending to eBay — knew about the cookie stuffing and encouraged both to keep doing it despite being against the rules. But neither was able to produce any evidence to that effect.
According to Business Insider, both Hogan and Dunning recently pleaded guilty to one count of wire fraud. They each face up to 20 years in jail, but could get lighter terms because this is a first offense.
As I said, the whole article is an interesting read, whether you’re involved in affiliate marketing or not.