The eBay Affiliate Program Case

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.

Source: dailyblogtips.com