The eBay Affiliate Program Case

By Daniel Scocco

If you have been building websites or working with Internet marketing for a while you probably already visited the DigitalPoint forum. It’s the largest and one of the oldest online, and it’s owner, Shawn Hogan, was well known in the Internet marketing circles.

A couple of years ago I read around the web that Shawn was facing some legal troubles with his affiliate marketing activities, but there weren’t many details about the issue.

Fast forward to the present day and it seems that the problems he was facing were both real and serious, according to a recent article on Business Insider, titled How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison.

Here’s a quote:

eBay paid Hogan a staggering $28 million in affiliate marketing sales commissions over the years, according to court papers.
Affiliate marketers place ads or links for eBay on their own networks, or on other people’s sites, and they collect a cut of any sale the online auction company generates from them. eBay has about 26,000 of them, or more, at any one time, feeding traffic to its auctions.

But recently Hogan had fallen out with eBay, and the company had sued him, accusing him of fraud. eBay had also been cooperating with the FBI since June 2006 to root out affiliate marketers whose success was a bit too good to be true. The company had even created a piece of software to monitor Hogan’s internet traffic – an online sting operation the company named “Trip Wire.”
eBay alleged that what Hogan did to earn the sting operation and the knock at his door by the FBI was to rig eBay’s system so that it falsely credited him for sales he did not generate. He did it by seeding unknowing users with hundreds of thousands of bits of tracking code, or “cookies.” If any of those people bought something on eBay, the code signaled to eBay that Hogan should get a cut of the sale – even though he had done nothing to promote eBay.

The article explains how they made the money, how eBay set an operation to discover what was happening and so on. There are even some allegations that eBay knew what Shawn and the other top affiliates were doing to generate the traffic, and even encouraged it initially. In other words, it’s an interesting read, so check it out.




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16 Responses to “The eBay Affiliate Program Case”

  • The Web Designer

    Incredible. $28 million in affiliate “earnings”. I’ve seen people who figure out ways to get extra traffic to their sites from ebay, but “seeding” users with hundreds of thousand of bits of code (cookies) has me curious as to how that would be accomplished.

  • Rahul Kuntala

    That’s unbelievable!

  • Rinkesh

    OMG…I can’t believe it. $28 million in affiliate earnings. Some people die rich while some go prison rich.

  • Slavko Desik

    It’s interesting how there are many people like him (not on this scale though) that no one ever heard about. That’s why such articles are gold. Though it bothers me when I see people frauding the system. It eventually catches up.

  • Casey S. McClure

    Unreal! I can’t imagine having that kind of success in Affiliate marketing. You have to give him credit – he had to know his stuff to do that. Still, he was committing fraud.

  • Brian

    There is no such thing as perfect crime.
    Sooner or later, people will find out about it.

  • SD

    $28 million! some people are born lucky…but still hard work pays a lot.

  • Mike

    He was cookie stuffing wasn’t he? I remember when this first came out.

    You basically point an image tag to your affiliate link instead of an image so went some visits the page, your cookie is dropped.

    Not worth trying now a days as affiliate networks can easy detect this and ban you (or get you locked up).

  • Ehsan

    Sounds strange, I wish to be able to fraud companies like eBay. 😀

    Kidding.

  • Terry

    This case had been ongoing since 2006 and yet still not completely resolved? It would be interesting to find out what would be the final verdict on this case. What puzzles me is the line where it says “eBay encouraged it???” during the early phase. No wonder new laws are now in place in Europe about the use of cookies.

  • Lakhyajyoti

    $28 million is really a big amount through affiliate marketing. I don’t know much about affiliate marketing. Thanks for the share.

  • Denzil

    Guys like that make it difficult for us to get into the market and make some money. Shame on him.

  • Sahith

    Wow! that’s really a huge amount!!!

  • Kevin

    I agree with Denzil, no matter what market you are in or what business venture you try to make work, there is always someone trying to abuse the system and take the easy road. I suppose it is human nature (for some), but it does make it harder for the rest. I guess just work harder is the only thing you can do.

    As previous people mentioned – eventually the crooked get caught.

  • Jason

    28 millions from just affiliate marketing wow i guess if you are willing to take the chance then you are prepared for what will happen

  • Robert

    Given how legitimate marketers have had their Paypal accounts closed down for no good reason, you do wonder how come he never raised any flags with them. I wonder if that’s being investigated?

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