Smashwords Catches Affiliate Link Scam – Reverses $1300 in Fruadulent Purchases

Smashwords' new fraud prevention dept

The problem with any retail operation is that there will always be some scammer who is out to cheat customers, and Smashwords is unfortunately no exception. While this ebook distributor has long had a process to block scammers from selling PLR and other crap ebooks, there's not much they can do to stop scammers from using Smashwords to commit credit card other than try to catch it as soon as it happens, which is what occurred this week.

We discovered a series of fraudulent purchases that took place over the last 48 hours, amounting to approximately $1,300 affecting about 190 authors and publishers.  The purchases were made with multiple stolen credit cards and involved fake customer accounts and was perpetrated by someone who created at least two affiliate accounts then tried to funnel sales through their affiliate accounts to earn the 11% commission.

The fraudsters were using SW to get money from stolen credit cards, only they seem to have chosen a relatively inefficient method to do so. They only got around $200 in affiliate fees before they tripped a flag in one or more of the fraud prevention systems (SW, Paypal, or the credit card companies). And once someone started looking, it wasn't hard to identify other fraudulent transactions; it seems that there was no pattern to the ebooks chosen (other than the affiliate fee):

They obviously weren't interested in the books, judging from the eclectic tastes that ranged from books on weight loss to computer programming to paranormal romance to airplanes.

But all's well that ends well.  The charges have been reversed, and will show up on authors' next statement as such. Reversals are few and far between at Smashwords, and most involve these larger criminal exploits.

And now that it's over, I have to chuckle at the ineptitude of the criminals. They put how much work into this just to make off with a mere $200? It's almost as if we got to see the policeman's blessing (may your criminal's be inept) play out in real life.

image by LizMarie_AK

About Nate Hoffelder (11376 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader: "I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

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