Crime in the Suites: An Analyis of Current Issues in White Collar Defense
Posts Tagged ‘Affiliate marketing’
Apr 23

Suspect Extradited From Estonia to Face Massive Internet Fraud Charges

One of the features of crimes committed over the Internet is that they may be committed from anywhere in the world where a defendant has access a computer. A current case in New York shows that extradition likewise can reach around the globe.

On April 19, 2012, Anton Ivanov was extradited from Estonia to face charges of conspiracy to commit wire fraud and computer intrusion, among other offenses, in the U.S. District Court for the Southern District of New York. Ivanov is one of a number of defendants accused of a technologically sophisticated scheme that used malware and other techniques to reroute Internet traffic to websites chosen by the defendants because they were paid for driving traffic to those websites. According to the government, more than four million computers located in over 100 countries were infected with the malware as part of the scheme, which allegedly netted millions of dollars for the defendants.

Victims’ computers allegedly became infected with the malware when they visited certain websites or downloaded certain software to view videos online. The malware enabled the defendants to digitally hijack internet searches by changing the DNS server settings on victims’ computers to reroute their searches to “rogue DNS servers” controlled and operated by the defendants. Victims were re-directed to unwanted websites either when they clicked on internet search links that they thought would take them to other websites (what the government refers to as “click hijacking”) or through advertisements that Ivanov and others allegedly substituted for advertisements that were supposed to appear on particular web pages (what the government calls “advertising replacement fraud”). Arrangements have been made to substitute legitimate servers for the rogue servers as a temporary remediation measure so that victims’ computers will not lose their ability to access websites.

Ivanov has not yet indicated what his defense will be to the charges. He faces a maximum sentence of 85 years in prison in the case, which is pending before U.S. District Judge Lewis A. Kaplan. His next court appearance is set for April 23, 2012. Ivanov’s co-defendants in the case include five other Estonian nationals also arrested in November 2011 who are in custody in Estonia, and one Russian national, who remains at large.

As the Internet continues to expand to include a greater portion of the global economy, the ability to reach enormous numbers of computers will create incentives for technologically savvy wrongdoers to manipulate Internet users for illegal purposes. This case shows that the scale on which Internet conduct operates will mean that affiliate marketers and others who direct traffic on the Internet will be the subject of scrutiny by federal authorities. Even companies that are engaged in legitimate Web-based businesses need to be aware of this possible scrutiny.

posted in:
Jan 28

Ifrah Law’s Semi-monthly Blog Wrap-up, January 15-31

This is the first of a regular series of posts that summarize and wrap up our latest thoughts that have appeared recently on Ifrah Law’s two blogs.

1. Can Police Read a Suspect’s Text Messages Without a Warrant?

What happens when the usual rules of search and seizure collide with the new world of information in which a tiny phone can hold as much data as a computer? On January 19, we looked at a California Supreme Court decision that in a warrantless police search after an arrest, a cell phone in a defendant’s pocket isn’t treated any differently from a pack of cigarettes or a note pad.

Read the full post here on the CrimeInTheSuites blog.

2. E-Cigarettes, the Internet, and the FTC

Electronic cigarettes are battery-operated nicotine delivery devices that are meant to replicate the flavor and sensation of smoking a tobacco cigarette. On January 20, we made some predictions about how the FTC will be regarding online advertising strategies for this new product and what online advertisers should do about it.

Read the full post here on the FTCBeat blog.

3. ‘Fake’ Reviews and Endorsements Catch the FTC’s Attention

On January 24, we took a look at the FTC’s first case that focused on “fake” product reviews and explained what this means for other affiliate marketers. The FTC alleged that a PR firm called Reverb Communications had its employees pose as ordinary consumers when they posted online iTunes product reviews and that it didn’t disclose the relationship. We discuss why Reverb’s settlement set important precedent for online advertisers, affiliate marketers and bloggers.

Read the full post here on the FTCBeat blog.

4. An Unfair Sentence for Slaughterhouse Plant Manager?

A few months ago, Sholom Rubashkin, the former plant manager at Agriprocessors, Inc., in Iowa, was sentenced to 27 years in prison for fraud in his operation of the kosher slaughterhouse. The case drew national attention. Recently, three influential legal advocacy groups filed amicus briefs in a federal appeals arguing that the sentence is excessive and urging that Rubashkin be resentenced. On January 25, we examined these amicus briefs and their arguments.

Read the full post here on the CrimeInTheSuites blog.

Oct 20

FTC Getting Serious About Full Disclosure in Endorsements

The Federal Trade Commission is taking steps to show that it is quite serious about enforcing the so-called blogger disclosure rules that it issued last year.

The rules say, essentially, that when someone endorses or reviews a product or service, the person must disclose any relationship with the company that produces the product. So if a blogger gets a free item from a manufacturer, the blogger has to say so in his or her review. The idea is that consumers would want to know if the objectivity of a review is tainted in any way.

This type of problem occurs frequently in affiliate marketing, since the affiliates of a manufacturer can discuss the manufacturer’s products in their blogs. This would be a relationship that would have to be disclosed.

But the rule isn’t limited to bloggers or affiliates. The commission just served notice that public relations and marketing firms are squarely in its focus. What if a PR firm’s employees are endorsing their clients’ products without disclosing that they are, essentially, being paid to do so?

That issue just came before the FTC. Tracie Snitker, the founder and sole officer of Reverb Communications, a small PR firm in the Sacramento area, signed a consent order that became final in late September. She agreed to remove any reviews on iTunes that discussed apps produced by Reverb’s game developer clients that were actually written by Reverb employees who posed as ordinary customers and failed to disclose the relationship.

In addition, Snitker agreed not to post any further reviews on iTunes that fail to make that kind of disclosure – in effect, she and her employees are not allowed to pose as independent consumers.

Mary Engle, the director of the FTC’s Division of Advertising Practices, said at the time that the basic principle is clear: “Companies, including public relations firms involved in online marketing, need to abide by long-held principles of truth in advertising.”

The agreement that Snitker signed is legally binding. It follows a less stringent action that the FTC took in April against Ann Taylor Stores, which gave up to $500 in gift cards to bloggers who attended a preview of its summer 2010 design collection. Not all the bloggers disclosed this financial connection.

In the Ann Taylor case, the agency simply closed the matter with a nonbinding “closing letter,” in which it stated that it expected Ann Taylor to “take reasonable steps to monitor bloggers’ compliance with the obligation to disclose gifts they receive.”

Affiliate marketers need to be aware of these two government actions of increasing severity. Endorsements are fine; you can say what you want, but you had better disclose your financial ties, whether you are an affiliate, a paid endorser, a PR firm employee, or simply the recipient of a free gift card.

Connect with Us Share

About Ifrah Law

Crime in the Suites is authored by the Ifrah Law Firm, a Washington DC-based law firm specializing in the defense of government investigations and litigation. Our client base spans many regulated industries, particularly e-business, e-commerce, government contracts, gaming and healthcare.

Ifrah Law focuses on federal criminal defense, government contract defense and procurement, health care, and financial services litigation and fraud defense. Further, the firm's E-Commerce attorneys and internet marketing attorneys are leaders in internet advertising, data privacy, online fraud and abuse law, iGaming law.

The commentary and cases included in this blog are contributed by founding partner Jeff Ifrah, partners Michelle Cohen and George Calhoun, counsels Jeff Hamlin and Drew Barnholtz, and associates Rachel Hirsch, Nicole Kardell, Steven Eichorn, David Yellin, and Jessica Feil. These posts are edited by Jeff Ifrah. We look forward to hearing your thoughts and comments!

Visit the Ifrah Law Firm website