FBI, eBay and Digital Point
 

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.

http://www.businessinsider.com/ebay-...dunning-2013-4

He should have called it a "tax" then it would not have been stealing.

Seems like cookie stuffing would be a civil lawsuit. How did the FBI get involved? Wire fraud? Wire fraud is such a broad spectrum of activities, that would be my best guess.

Cookie stuffing.

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." - Benito Mussolini.

The US isn't currently fascist... right?

nah.... couldn't be....

Yes by definition america is tyrannical, theological and fascist.

arrest all the cookie stuffers for all i care. they are fraudsters plain and simple.

So some douchebag rips eBay for tens of million$, and it's law enforcement that's wrong here?

Just trying to clarify...

Have no clue. The US laws are so complicated to me. For example, in my country it's not a crime at all.

isn't fraud illegal? and many things can fall under what fraud is. so..

Wonder what that means for digital point forums.

"Arrest people that I don't like... fuck the rule of law!" *air guitar*

The problem with the politically retarded is that they are becoming a danger to the rest of us.

This happened some time back now, but DP has continued

so you are in favor of fraud? good to know.

I'm pretty sure I hate you... and I am definitely sure you hate me, however...

Bravo. :2 cents: :thumbsup

It depends whet exactly could be called as a fraud. For example you have bought some links to your website to fake Google and make it (your site) appear higher in the SERP's. Is it a fraud or not?

i suppose it could be considered fraud but google still benefits no matter how you seo your pages. whereas with cookie stuffing ebay was paying out millions for nothing. hogan didn't promote ebay, all he did was put cookies on millions of computers so anytime someone visited ebay he got paid. basically theft.

FBI got in on it because of the money. Oh he is banking. Lets go take all his shit. Give him a fine for the amount of what he is worth and move on

It's amazing they didn't catch him sooner. It doesn't seem like it would be very hard to catch with a little programming and the occasional manual human check.

Ok, let's say you are putting Google Adsense code into other pages that are not allowed by Google rules (remember, Google pays out millions for Adsense blocks). E.g. the sites, automatically generated by the scripts. Is that a reason to put you into the jail?

That is conspiracy to commit wire fraud

I didn't get it. So if you made a splog using sponsored RSS feeds or put a Google ad block to such a site, you can get a prison time for a wire fraud? Are you serious?

It definitely is. But OTOH we all know that millions if not billions has been stolen from affiliates over the last two decades using various methods of fraud such as shaving. In our industry we even had software companies openly making "shaving software". Clearly this is fraud or is aiding in fraudulent activities. So who has gone to jail or had their house or business raided over it? Can anyone give me any names? It would be nice to see some action on the other side of things too.

i wouldn't say so. despite it being against the rules it still requires people to visit and click in order to make money and for every click, google makes money as well. its not really comparable. if you were auto generating clicks and got away with it to the tune of 20 million dollars, well then that would land you in some serious trouble i would imagine.

Its funny "Ebay knew was I was doing" They sure did. Its called a sting operation. They arent in trouble for cookie stuffing. They are in trouble for what the cookie stuffing did for them monetarily.

I don't look but ebays claims are likely civil. I would guess the law views cookie stuffing as stealing from /defrauding webmasters.

they view as wire fraud. not sure why exactly but cookie stuffing does destroy the affiliate model.

yeah, the only reason anything happened is because its big ass ebay. the tubes are cookie stuffing for cam sites and nothing is happening.

A few years back I met this girl at a bar with big tits. And since I LOVE big tits, we started talking. I bought some drinks, we got high, etc.
I took her home.

When we got naked it turned out she was wearing a padded, push-up bra!!! And her tits weren't very big at all. :(

I shoulda called the FBI for "Fraud" and "bra stuffing" :(

I assume that he caused eBay to pay commissions in sales where otherwise none would be due and none were earned. Wire fraud is a broad crime and incidentally also means computer fraud would be charged as well as a host of other state and federal charges relating to fraud which overlap in their applications and definitions.

Civil case, sue for cost of drinks and you time:winkwink:

:1orglaugh

Interesting.

I remember reading somewhere that the owner of Digital Point had some problem with massive cookie stuffing in the past in his forum, is this the same problem? Is it related?

This was years ago.. Wow it took long.

BTW, after doing 30 million, he had that small modest apartment?... Strange.

LOL i remember a post of Shawn on DP asking for donations to pay the hosting bills

Why do you post these wrong comparisons? (Better comparison would be that you fake generated clicks and got paid for them).

With cookie stuffing its 100% clear fraud/theft.
Cookie stuffer, ebay surfer and ebay. Stuffer stuffs surfer, surfer goes to ebay, ebay pays stuffer. Stuffer stole moeny from ebay. Its that simple.

People still does that ?

i thought companies have custom system in place which tracks the fraud/ cookie stuffing and bans account

:thumbsup - America, land of the wiretapped.

Are you wrapping up some of your affiliate codes in software you bundle and give away?
If I do everything I can to replace your cookie then I think that's wire fraud.

I wouldn't mind paying affiliates if they sent people over under the premise they knew what they were getting.

I would have interest in prosecuting someone who tried to get affiliate commission from me even if it were by chance and because mainstream ebay caters to everyone that's a very high possibility.

The think I love about the article is the infamous "7am raid"

That isn't what he was doing.

Here is an example that might not be 100% accurate, but still fits the basic idea.

In my town there is a grocery store that has a rewards card. When you shop you slide your card through the card reader and they track your purchases then every 3 months they give you rewards based on how much you spent.

So lets say they hired you to promote them. Your job is to go out and give people rewards cards. These cards will have a piece of code in them that when swiped will tell the stores computers you sent this person to them and you will get a commission on the sale.

So if you stand outside a high school football game and hand a card to everyone that leaves or enters the game you are basically making splogs. You are giving away a lot cards, but likely not making a lot of money and what money you do make you did earn because you did hand the card out.

Then one day you devise a way to use your laptop and an antenna that will broadcast at a frequency that can communicate with the strip on the card. You make it so that whenever you send out this broadcast anyone within range who has one of those cards will now have your code embedded on it. You didn't give them the card, you just, unknown to them, modified their card so you get a commission on every sale. Now you can just sit in the parking lot and broadcast a few times per day and rake in the sales without doing anything. That is fraud and that is basically what this guy was doing.

so if you are doing to good, they will monitor you traffic and kick you out.

What I don't get - why would ebay encourage him to continue? They make a loss with his cookie stuffing. The employees who were virtually sucking his dick must have been clueless and thought he was actually bringing in sales, not just reaping profits from them.

Maybe FBI found somehow about ebay tolerate practices , threatening them and they simple rat DP.