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eBay sues business partners over alleged cookie stuffing

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Internet auction site eBay is suing some of its business partners for 'cookie stuffing', a kind of advertising fraud. It claims partner sites are pretending that users have clicked on eBay ads when they have not.

eBay pays other site owners to advertise its services. The site owners, or affiliates, are only paid, though, when someone clicks on the advert and takes a revenue generating action on eBay within a certain period of time. That could be signing up to the site or buying or selling an item. The activity of users is tracked by cookies, small text files stored within web browsers by the sites that are visited.

eBay has accused Digital Point Solutions (DPS) and Kessler's Flying Circus (KFC) of secretly redirecting web users' computers to eBay, where an eBay cookie would be placed in the user's browser.

That activity would "wrongly associate future revenue actions, if any, by that user with DPS or KFC," said eBay's suit.

The activity makes it look as though the user has clicked on a DPS or KFC ad so that if they do engage in eBay transactions those companies will be paid a fee by eBay.

"DPS or KFC would receive payment for actions by users who had not been referred to eBay by [their] advertisements, thereby damaging eBay," said the suit.

The suit outlined quite sophisticated techniques. It said that to avoid detection, the companies had never cookie-stuffed the same computer twice because that would increase the chances of detection by eBay.

It also claimed that the stuffing never took place in San Jose or Santa Barbara, where eBay and the company that ran its affiliate marketing programme Commission Junction (CJ) were located. "The purpose of this action was to evade efforts by eBay and/or CJ to detect the cookie stuffing mechanism if they attempted to observe the wrongdoing from their normal places of business," it said.

Though eBay does not say how much it has lost through the alleged fraud, it said that it has paid out to DPS and KFC on "a substantial number of Revenue Actions that were in no way related to referral of any user by either DPS's or KFC's advertisements and for which neither DPS nor KFC were due compensation".

EBay has asked the US District Court for the District of Northern California for an injuction to stop DPS and KFC from engaging in the cookie stuffing, as well as a return of all the money earned through the alleged scheme. It has also asked for punitive damages and treble damages against some of the defendants.

Copyright © 2008, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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