Shawn Hogan and Brian Dunning earned a combined $35 million in commissions from eBay’s affiliate partner network over several years. Hogan alone was responsible for 15% of eBay’s entire partner network which is about $70 million annually. The average affiliate makes an estimate $2,700 a year so there must be something Hogan and Dunning do different from the 26,000 other affiliates, right?
In 2014, Shawn Hogan was sentenced to federal prison after reaching to a civil settlement with eBay for stealing sales directly from the company.
Affiliate theft occurs when users download toolbars or attachments to their browser usually in order to help save money via discounts and/or coupons. The part that isn’t shown is the coding which allows affiliates to infiltrate your searches and manipulate the data given to the marketing program. Even though you may be going directly to the website, the coding (tracking cookies) tells the program you came from an affiliate site which ends up giving credit to that affiliate website. This takes away direct sales from the seller and tricks them into giving a commission based sale to an individual who manipulated the customer’s computer.
Your affiliate managers and/or firm may be looking the other way with such instances since their compensation and success is based off the results of the affiliate program. During the investigation of Shawn Hogan, he admitted the eBay affiliate program knew what he was doing and even took him out to Las Vegas dinners with the company jet. Each year millions of dollars are being distributed to affiliates from sales that were already guaranteed to the company. They are not stealing from the customer; they just consume the user in order to steal directly from the company.
The cookie implanted onto the user’s computer may only show for a split second while it redirects the user back and forth from the “affiliate” and buyer. It is completely unnoticeable to the user and overlooked by the company since it is passed off as new revenue. Best way to combat this type of theft is when auditing the program, look at the top performers and look for outliers such as loyalty sites or coupon programs since these are likely places for users to download the toolbars. If you and your company have not heard of the site and they are a top producer, there is a very good chance you have a theft issue in your program. If total sales stay the same after removing one of these top affiliates, then you were able to catch someone stealing directly from your revenue.
Companies should take a closer look at their network programs and ensure there isn’t any suspicious behavior. This type of eCommerce theft could have you paying large sums of commissions out of pure profit and losing out on other marketing programs.