How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison - Yahoo! Finance
Shawn Hogan
The knock at the door came at 7:03 a.m.
Shawn Hogan, the CEO of a successful online marketing company called Digital Point Solutions, was sitting on his sofa. He didn't immediately answer the door. Then the key turned in the lock.
Nine FBI agents entered Hogan's upscale condo to serve a search warrant. They obtained access from a maintenance worker, according to a copy of the search report.
The agents took photos of his circular living room, and its wraparound windows looking out onto San Diego. Hogan's white cat appears in several of the pictures, perched unconcerned on a chair, but the real focus of the investigation was his computer equipment. Much of Hogan's apartment was a clutter of screens, hard drives and keyboards — which the FBI confiscated.
As they questioned him, Hogan told the agents he had been expecting them.
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 sting also netted Brian Dunning, eBay's second biggest affiliate marketer. The company had paid Hogan and Dunning a combined $35 million in commissions over the years, court papers say. Both men have since pleaded guilty to wire fraud.
This is the story of how eBay turned against the most successful affiliate marketers it has ever worked with. It is taken from the personal accounts of both men, and from civil and criminal court papers filed in litigation by eBay and the FBI.
How eBay Worked With The FBI To Put Its Top Affiliate Marketers In Prison 
