A Laguna Niguel man admitted defrauding online auction giant EBay Inc. out of potentially millions of dollars in a scheme of “cookie stuffing,” which is a lot less savory than it sounds.
Brian Andrew Dunning, 47, pleaded guilty to wire fraud in federal court this week, U.S. Attorney Melinda Haag said. Dunning faces a fine and a possible jail sentence.
Dunning admitted that between May 2006 and June 2007, he engaged in a scheme that caused EBay to pay him commissions for generating Web traffic to EBay that was achieved through fraudulent means.
According to the plea agreement, Dunning and his brother formed a company called Kessler’s Flying Circus, through which they participated in a program EBay used to drive Internet traffic to its websites.
Under the program, an affiliate such as Dunning’s company was supposed to send visitors to EBay’s website by displaying an EBay advertisement, or link, on the affiliate’s website. If a visitor clicked on the EBay link or ad, he or she was redirected to EBay’s website. If that user subsequently conducted a “revenue action” on EBay’s website within a designated period of time, EBay paid the affiliate a commission for the referral.
That was where the black hat practice known as cookie stuffing came in.
Dunning provided free applications at two of his websites that users could download and use on their own websites: ProfileMaps.info, which showed the physical location of visitors to a MySpace profile, and WhoLinked.com, which showed who was linking to the user’s website or blog.
Both applications contained secret code Dunning had written that operated so that, when a user visited a website that had installed the application, the code would cause the user’s browser to receive a hidden “cookie” of data with the identification number of Kessler’s Flying Circus, even though the user did not click on an EBay ad or link, did not see any content from EBay’s website, and did not realize that his or her browser had been redirected to EBay’s tracking server.
If that user subsequently bought something on EBay within a certain period of time, Dunning would be paid by EBay. The online auctioneer paid Dunning’s company about $5.2 million in 2006 and 2007, the U.S. Attorney said.
Dunning admitted that he received payments he was not entitled to but reserved the right to dispute how much of those payments were attributable to the cookie stuffing scheme. An evidentiary hearing to determine the loss amount will be held on Aug. 8.
The maximum penalty for such wire fraud is 20 years in prison and a fine of $250,000, or twice the gross gain or gross loss from the offense, whichever is greater, plus restitution.