Digital Point Solutions Responds To eBay’s Cookie Stuffing Allegations with Mud Slinging

Editor’s Note: The following is an analysis of a set of claims made by Shawn Hogan regarding his time as an affiliate of eBay. The claims made by Hogan are serious in nature but are made in an unstructured fashion, delivered without evidence, and seem to be an attempt at salvaging his image. Such claims thus fall into the realm of rumor and innuendo meant to damage eBay’s reputation. It should be noted that eBay was always in good standing while  a Commission Junction merchant and that they are not currently, nor ever have been,  under investigation for such activities as claimed by Hogan.

Last week I posted about criminal charges being filed by the Justice Department against Shawn Hogan of Digital Point Solutions and Brian Dunning of Kessler’s Flying Circus related to allegations of cookie stuffing in the Ebay affiliate program. These were separate charges following a civil suit filed by Ebay in 2008 for the same activity.

Digital Point Solutions Responds

There are always at least two sides to every story. Yesterday evening I received a ping via Twitter linking to a blog post by Digital Point Solutions, written by Shawn Hogan, responding to these allegations. The post is rather long, rambling, and sensational, to say the least. In the post, Hogan defends himself against the charges of cookie stuffing and makes a few rather serious allegations against eBay.

Cookie Stuffing Timeline According to Hogan

I’ll try to summarize the claims made by Hogan, beginning with those aspects related to cookie stuffing activity. The following are facts according to Shawn Hogan:

• Hogan began working with the eBay affiliate program in the fall of 2004, at which time he began an SEO campaign to rank the term “eBay”. By the end of 2004 he held Google SERPs in the top 5 for “eBay” and maintained those until April 2006.

• The rankings were achieved, in part, through Hogan’s Co-op Ad Network. In early 2005, Hogan’s affiliate account came to the attention of eBay because of activity levels and he was assigned a direct eBay representative.

• In the spring of 2005, eBay suggested that Hogan’s Co-op Ad Network be used as a traditional ad network for delivering ads instead of a mechanism to only increase SERPs. Hogan began displaying a small percentage of the ad inventory with eBay ads (“tens of millions” of ads daily) which were ultimately affiliate links. This grew his affiliate account by “300%”.

• In the summer of 2005, eBay approached Hogan wanting more traffic at the same time suggesting he “experiment” with “gray area” techniques that were technically in violation of eBay’s TOS.  One of those techniques described was cookie stuffing, although Hogan does not specifically call it cookie stuffing in his post.

• Towards the end of the summer of 2005, Hogan’s eBay affiliate account showed up on a compliance report performed for eBay by Ben Edelman, an independent third-party compliance expert specializing in adware. [Author’s Note: It is unclear as to whether Hogan was experimenting with adware as a form of traffic generation to bolster cookie stuffing efforts. The Justice Department’s charges only indicate cookie stuffing via web pages.]

• Hogan was told by eBay that he was free to experiment as long as he didn’t show up in outside compliance reports. Hogan further states that eBay recommended he use geo-targeting to remain outside of areas that Ben Edelman was likely to be testing from. At an unidentified point eBay contacted Hogan to request the Digital Point Geo Visitor tool, which was installed on “millions” of web pages, to direct to eBay’s site when clicked instead of to the expected map. Hogan states this was being done some, but not all, of the time.He also states he informed eBay this violated their TOS, but that after consultation with their legal department, eBay requested that the Geo Visitor icon be occasionally replaced with an eBay icon. Hogan claims he considered this a “bait and switch” tactic and wanted to stop it altogether. However, the “pressure from eBay” ultimately won out and tactic was implemented, resulting in a doubling of his affiliate revenues.

• During a private dinner at eBay Live! in the summer of 2006, eBay again asked Hogan for more traffic. Hogan stated there was no way to drive more traffic without using non-compliant means. Hogan claims that the eBay rep responded: “As long as you don’t show up on compliance reports, it’s compliant as far as we are concerned.”

• Sometime in the fall of 2006, Hogan showed up on Edelman’s compliance report for the second time. eBay told Hogan to change his PID so that Edelman could not connect the accounts in any further testing.

• In the fall of 2006, eBay implemented their Rover links. Hogan was pressured by eBay to change his links over, but repeatedly resisted the change, asking them why they wanted the change. Hogan claims eBay finally responded, after months of questioning, that traffic coming through Rover had no compliance check.

• In June of 2007, eBay ended the affiliate relationship.

Hogan’s Allegations Against eBay

• Hogan speculates that the management staff of eBay’s affiliate program was compensated based on commissions paid to affiliates which caused them to turn a blind eye to his activities.

• Hogan further speculates that when Meg Whitman, eBay’s former CEO, left the new management began looking closely into how eBay was being run, including the affiliate program. The new management decided to “clean house” and he was ultimately used to set an example to all affiliates via the civil suit.

• Finally, Hogan contends that the criminal charges amount to a political favour since one of eBay’s civil lawyers has worked for the District Attorney’s office.

The Digital Point Solutions post might be a peek into the defense strategies which may be used in both the criminal and civil suits still pending before the courts. I am somewhat surprised to see the post at all since most defense attorneys usually aren’t keen on their clients making any kind of statement while litigation is ongoing.

Hogan seems to basically admit to cookie stuffing, along with some other tactics not covered in the indictment, and to knowing that such tactics violated eBay’s TOS. His defense appears to hinge on his claims that he was not only being given permission by staff on eBay’s affiliate team but pressured to use such tactics. However, admitting knowledge of the illegality of his actions does not make him any less culpable for them, regardless of whether or not his behavior was endorsed by an outside party.

Further Allegations Against eBay

Hogan makes further allegations of wrong doing by eBay that are not directly related to cookie stuffing, some of which are pretty serious.  These claims are outlined below:

• Early on during the spring of 2005, Hogan became tired of hearing his eBay contact talk about his “crappy” car. In order not to have to hear the repeated complaints, Hogan made a deal that if he ever made more than $1 million a month with eBay he would buy the rep a new car. Around the time he implemented the Geo Visitors switch and his affiliate commissions doubled, he began earning the $1 million a month. Hogan claims he gave his eBay contact $50,000 so he could buy the car himself.While Hogan admits it wasn’t “extortion” because he made the offer himself, he felt like it was due to continued pressure from the rep. Subsequently, he claims he was “coerced” into buying other items for his contact, including a plasma TV and laptop, and was told that “all the affiliates buy their contacts stuff like this”.

• Hogan claims that eBay admitted to him that their TOS were a “façade” allowing them to engage in any activity they wanted, such as spamming search engines, while providing eBay with deniability to major partners like Google. This way eBay could blame the bad behaviour on affiliates.

• Hogan further claims that during the private dinner at eBay Live! eBay employees informed him of a “black budget” that entailed a large dollar amount to be used at their discretion. This was not reported on the balance sheets or to shareholders. In conjunction with this black budget, Hogan reports being solicited by eBay to spam the web with eBay ads while eBay bought hardware off-shore to run the campaign so that the ads could not be traced back to Digital Point Solutions by Google.He continues by saying eBay expressed their dislike for Google and wanted to pay Hogan out of this black budget to hurt Google anyway he could and to “take down Google datacenters somehow”. Hogan claims that eBay went as far as to fly down an executive from the pay per click division to discuss the possibility.

While most of Hogan’s allegations are serious and involve charges of possible criminal activity on the part of eBay, he posted nothing to substantiate any of his claims. While I know that some companies engage in the kind of activities described by Hogan, it also strikes me that if claims cannot be backed up with proof then they are merely hearsay in the eyes of the Court.

Affiliate Dirty Laundry

While affiliate fraud has been getting increased attention within our industry lately, I am aware that bad behavior isn’t limited just to affiliates. Over the years, I’ve seen questionable tactics and activity coming from networks, affiliate managers, and outsourced program managers. Greed is an equal opportunity corruptor.

Cookie stuffing has been a dirty side of our industry for years and continues to be present today. Indeed there are still numerous posts on Digital Point Solutions forum promoting ebooks and scripts for cookie stuffing (screens shots available).

There is plenty of “dirty laundry” to go around in the business. This includes managers who encourage affiliates to break a programs’ TOS. I know firsthand of such incidents. It is an unseemly side of the business that unfortunately happens. It appears that if either of the cases against Hogan goes to trial, the dirty laundry of affiliate marketing may be paraded across the courtroom, and not just as it relates to cookie stuffing. I wonder what impression of our industry this will leave on jury members.

We Have Choices

When I step back from Hogan’s post and put aside the sensational elements, a few things strike me. First, Hogan admits to engaging in cookie stuffing tactics, albeit with the alleged blessing of eBay. Second, he admits to using Digit Point Solutions tools (the Ad Network and Geo Visitors) to implement some of his tactics. These were tools installed on others’ web sites, undoubtedly with some degree of trust that they weren’t being used by the provider to engage in questionable affiliate tactics.

Hogan further admits knowing these tactics were against eBay’s TOS. His justification for engaging in the tactics seems to be eBay’s condoning and encouragement of the tactics.

We all have choices in our business dealings. No one could force Hogan to remain in the eBay program. No one could force him to engage in activities he knew to be in violation of their TOS (and indeed CJ’s TOS, although he never mentions CJ at all in his post). Even if any part of Hogan’s claims regarding eBay’s conduct is proven to be true, I do not subscribe to a “two wrongs make a right” mentality. And, frankly, neither does our legal system. Any wrongdoing on eBay’s part in no way justifies knowingly engaging in wrongdoing by Digital Point Solutions.

Regardless of what a representative of a merchant or network may tell an affiliate privately, affiliates should keep in mind that there may be someone further up the company food chain who disagrees. Ultimately, Terms of Service are legally binding documents between an affiliate and the merchant/network. It is prudent to abide by those TOS. If you choose not to follow those terms your are legally bound by, it can land you in court, regardless of how honorable or not others around you have behaved.

About Kellie Stevens

You can follow Kellie on Twitter: @KellieAFP.

Website: http://www.affiliatefairplay.com