Two eBay super affiliates could be heading to prison for their roles in a massive cookie stuffing scheme that generated millions of dollars in revenue.
Shawn Hogan and Brian Dunning were indicted back in 2010, though eBay was aware of the plan as early as 2006.
Both men recently plead guilty to a single count of wire fraud in the case and face up to 20 years behind bars for their roles in the plan.
So how did two of eBay’s top affiliate partners go from the penthouse to the dog house (and maybe even the big house)?
It’s a story that serves as a warning for anyone in the affiliate marketing business (including casino affiliates) about the dangers of both black hat marketing; and playing fast and loose with the specific of your T&C’s.
Affiliate Cookie Stuffing
According to eBay, the men were illegally spreading their affiliate cookies to hundreds of thousands of unknowing Web users via a widget aimed at bloggers.
On the outside, the widget (called WhoLinkedThat?), allowed bloggers track where their traffic was coming from. But WhoLinked also dropped affiliate cookies in end user’s computers.
When those unsuspecting cookie carriers wound up at eBay, Dunning and Hogan got a cut of the action, to the tune of millions of dollars. At his peak, Hogan accounted for as much as 15% of the eBay’s total affiliate payouts and is accused of stuffing cookies with 650,000 eBay customers.
eBay officials first learned of the scheme in 2006 after following up on a tip from Dunning’s brother. Though their initial investigation didn’t turn up any wrongdoing, subsequent investigations did and that information was turned over to the FBI.
Did eBay Know?
Despite pleading guilty to the wire fraud charges, Dunning claims that eBay affiliate managers knew, and approved, of the plan. In an interview with Business Insider, Dunning says he stopped cookie stuffing at one point, but was encouraged to continue by eBay employees who noticed major, post-stuffing, traffic drops.
eBay denies Dunning’s claims and he’s yet to produce any documentation backing up his allegations.
Black Hat Affiliate Marketing
The eBay case has touched off a round of debate in affiliate marketing circles about where to draw the line between white and black hat marketing.
Though most casino affiliate partners know that cookie stuffing schemes is a violation of affiliate terms and conditions, few seem to realize that they’re also a violation of the law.
eBay is sending a clear message to affiliates that they won’t tolerate T&C violations, no matter how much revenue they generate. If eBay was willing to go after Dunning and Hogan, you’d better believe gambling operators will be willing to come after small-time casino affiliates.
Though cookie stuffing isn’t a problem in the online gambling industry (that we know of) other questionable practices are common, especially when it comes to SEO.
If you’re not sure whether your latest marketing idea is legal or not, err on the side of caution. Black hat shortcuts offer short-term gains but in the long run they’re just not worth the risk.
Affiliate Thug Life
As for Dunning and Hogan, they seem pretty at ease for men facing hard time. When asked about the possibility of his own Shawshank Redemption Hogan said:
It certainly would be an interesting life experience … Probably would be annoying after a while, but there certainly would be some short-term upside to it like not having everyone in the world bothering you and no responsibilities.
(Clearly he’s never seen an episode of Lockup.)
Who do you think is telling the truth here, eBay or Dunning and Hogan? Share your thoughts in the comments section below.