Facebook Launches Three Suits Against Affiliate Marketing Scams

On October 19, 2010, Facebook filed three separate lawsuits all involving use of the Facebook platform to engage in what Facebook considered fraudulent activates which were monetized through CPA networks.  The lawsuits named Steven Richter, Jason Swan and MaxBounty. as defendants. Two of the lawsuits named individuals and not the respective network as defendants.

All three cases involve running gratis offers on Facebook. Gratis offers are not uncommon on many CPA networks and involve the end user receiving some type of “free” offer (such as a gift card, iPhone, iPad) after they participate in a varying number of sponsored offers. These types of gratis offers have come under fire in the past by Attorneys General, the FTC and media outlets.

Causes Of Action

In all three of the civil suits, Facebook alleges the same causes of action:

  • Violation of CAN-SPAM Act of 2003
  • Violation of the Computer Fraud And Abuse Act
  • Fraud
  • Tortious Interference With Contract
  • Breach Of Contract
  • Federal Trademark Dilution
  • False Designation Of Origin

While the causes of action are the same between the lawsuits, the alleged actions taken by the defendants that triggered Facebook’s suit are somewhat different.

Facebook vs Steven Richter

Steven Richter is a resident of Kings Point, NY and an affiliate with CPALead. Note: Media Breakaway has posted a press release on their web site claiming that the Steven Richter named in this lawsuit is not related to the Steven and Scott Richter of Media Breakaway. Considering that Scott Richter was once dubbed the Spam King, it is an interesting coincidence.

According to the court documents, Facebook alleges the following:

  • Richter created more than 43 Facebook profiles and more than 40 fake Facebook Pages.
  • Richter was joined as an affiliate of more than one affiliate network, specifically CPALead. 
  • From at least December 2009 through March 2010, Richter used computers/servers under his control to create more than 40 fraudulent and deceptive Facebook Pages.
  • One example of the fraudulent Facebook Pages titled “Upgrade your account to Gold today!” encouraged users to upgraded to a Gold Facebook Account to receive “perks” which included “video chat”, “group chat”, “profile view notifications”, “themes” and “no ads.” The Page appeared to be operated and authorized by Facebook. When users clicked a link to apply for the Gold Account, they were instead redirected to a third party commercial site which tricked users into spending money on products and services unrelated to an upgraded Facebook account as originally promised. Of course, there is no such thing as an upgraded Facebook account. Note:  This appears to scheme I posted about back in February 2010, Black Hat Affiliate Tactics in the Facebook Era . You may want to review that post to see the scheme in action.
  • In another example, fraudulent Facebook Pages  promised visitors 500 Farmville dollars and a limited edition large horse stable if they “Liked” the Facebook Page and clicked a link on the page. Clicking this link redirected to user to a site under the control of Richter (to set the affiliate tracking link) and then to the advertisers’ site which promoted products and services unrelated to a Farmville offer.
  • Richter deceptively induced users to spread his schemes across Facebook by having the users send spam messages to their friends suggesting they visit Richter’s Pages.  This was achieved by providing users with malicious JavaScript code that automate the spam messages. Note: Generally, I have personally observed this technique of providing JavaScript to copy/paste into the browser which then sends messages to all friends.  Evidently, there are still plenty of people who do not appreciate the security risks.
  • In a third example, Richter controlled Facebook Pages which promised “UNLIMITED GAS FOR ALL VEHICLES*** 100% WORKING & FREE” in connection with Farmville. Visitors had to become a fan, send unsolicited invitations to all their Facebook friends to visit the Page, and visit a third-party site and provide their Facebook ID number in order to unlock the code for the free gas.  When the end user clicked the link provided in step 3, they were redirected to the advertiser’s site which promoted products and services unrelated to the free gas offer.
  • Through just one affiliate account, Richter allegedly earned $0.44 for each of the more than 388,000 Facebook users directed to the third-party commercial site; that is over $170,000.

Facebook vs Jason Swan

CPALead focuses on survey offers used as gateways to content on publisher’s sites (i.e. take a survey to access a game or content such as videos).

According to the court documents, Facebook alleges the following:

  • Jason Swan is the CTO of CPALead.
  • Since April 2009, Swan has created more than 27 fake Facebook profiles, more than 13 fake Facebook Pages and at least 7 Facebook Apps.
  • Swan was joined as an affiliate of more than one affiliate network.
  • One example of the fraudulent behavior involved a web site controlled by Swan which offered access to  a “Dislike” button to rate Facebook Pages the user doesn’t like (Facebook has no type of “dislike” functionality on their site) by completing a 30 second security survey to prove they were human. The security box questions led visitors to Swan’s application Quiz.me, which requested access to user’s profile information including their friend’s list and contact information.  Upon adding the Quiz.me application, users were directed to deceptive surveys which requested their name, email address and mobile phone number. The survey pages also included an “auto fill form” button displaying a Facebook trademark.  The Auto Fill Form copied and pasted the user’s information into “scam” forms. The survey’s eventually led to the user being signed up for subscription mobile services.
  • The Quiz.me additionally provided surveys that once completed would present the user with a page stating “We are generating your results. Here are some special offers while you wait.” All offers would set affiliate tracking codes if interacted with. Note: I’ve personally seen the Quiz.me application and experienced the behavior described.
  • Swan created fake Facebook profiles and sent spam to user’s Facebook friends encouraging them to visit Swan’s Facebook Pages and application.
  • Swan deceptively induced users to spread his schemes across Facebook by having the users send spam messages to their friends suggesting they visit Swan’s Pages.  This was achieved by providing users with malicious JavaScript code that automate the spam messages.
  • Swan used information obtained through his Facebook application to gain access to user’s friend list and send messages to those friends promoting his advertising web pages.

Facebook vs MaxBounty

MaxBounty is a Canadian-based CPA Network founded in 2004 by brothers JP and Steven Suave.  Unlike the previous cases, MaxBounty as a company as named as a defendant.

According to court documents, Facebook alleges the following:

  • MaxBounty  “conspired with, instructed, and encouraged its affiliates to carry out these schemes by providing them with assurances that their advertising methods were legitimate, by encouraging and coaching affiliates on ways to increase the effectiveness of their Facebook activities and providing technical support and substantial financial gain to its affiliates who agreed to participate in the scheme.”
  • MaxBounty reviews and edits the text of its affiliates’ Facebook Pages before they are distributed.
  • MaxBounty encouraged certain of its affiliates to advertise false and deceptive promotions on Facebook by misleading the affiliates that the campaigns are Facebook approved, providing support on how to create the campaigns and providing “substantial” advance payments to affiliates.
  • MaxBounty provides affiliates with content suggestions and tools which help/encourage the creation of “fraudulent and deceptive Facebook Pages.”
  • In one example, a Facebook page offered visitors a free $250 M.A.C. gift card by following 3 simple steps: 1) become a Fan of the Page, 2) invite all of their friends to the page and 3) register for the gift card. Visitors were told they would receive the gift card after a short registration process. After completing the 3 steps, users did not receive the gift card, but were directed to a MaxBounty domain and then a third-party site, Superb-Rewards.net. Once on the Superb Rewards site, users found out they had to complete 3 more steps, including signing up for 13 “Sponsor Offers”, many of which were memberships to subscription-based services.
  • MaxBounty encourages its affiliates to deceptively induce users to send spam messages to their friends (the requirement to invite all friends to the page) and the use of malicious code to automatically achieve the mass messaging of all friends.


Facebook is asking for similar relief by the courts in all three cases against the defendants. Aside from various monetary relief and damages, Facebook is also seeking injunctions to restrain defendants from accessing the Facebook website and services, and developing any Facebook applications.

Facebook has history of litigation against those who it feels are spamming its network. Last February, Facebook was awarded $711 million in damages against Sanford Wallace, who ran a spamming and phishing scam on the site, and Facebook also won an $873 million judgment against Adam Guerbuez of Atlantis Blue Capital, in November of 2008.

Summary and Implications

There seems to be a mixed bag of blame/responsibility being alleged by Facebook between the three cases for similar behavior. Jason Swan is named as a defendant as the CTO of the network. Steven Richter is named as an affiliate of CPALead. Facebook recognized that affiliates of MaxBounty were engaging in the activities but claims MaxBounty encouraged and assisted the affiliates in those actions.

If Facebook were to win the injunctive relief, this could pose an interesting situation for MaxBounty affiliates as a whole, who are promoting via Facebook.

These cases will be interesting to follow. I would expect to probably see some amended complaints in the future from Facebook. Regardless of any tidying up of the complaint Facebook may end up doing, it’s obvious that Facebook has decided they don’t want these types of deceptive marketing schemes being foisted upon their users.

How the defendants respond to these lawsuits will also be interesting. I wonder if we’ll see the rogue affiliate defense (although in the case of MaxBounty I wonder if that is viable) or will we see something new? If history is a good indicator, we’ll probably see finger pointing.

I’ll also be keeping an eye out to see if the FTC decides to jump on this bandwagon in the future. I doubt the ads I personally observed would meet FTC guidelines for truthfulness in advertising. In the past, the FTC has taken action based once litigation was before courts.

About Kellie Stevens

You can follow Kellie on Twitter: @KellieAFP.

14 Responses to Facebook Launches Three Suits Against Affiliate Marketing Scams

  1. […] post: Facebook Launches Three Suits Against Affiliate Marketing Scams … Posted by admin   @   25 October 2010 0 comments Tags : all-involving , […]

  2. Kevin says:

    Yeah, but it'll be interesting to see if FB can actually collect the money. I'll be watching this one. This is likely to be scare-tactics. Most of the ads that I see on FB are riddled with this garbage, and there are loads of "get rich from FB" schemes that promote this sort of thing. FB should do a better job of policing the garbage pages and watch for pages that get an unusual amount of "likes" and take action as appropriate. Anything outside of a normal distribution curve should be monitored.

  3. […] post: Facebook Launches Three Suits Against Affiliate Marketing Scams … This entry was posted in Uncategorized and tagged all-involving, facebook, filed-three, […]

  4. I can't see FB being able to collect money from this. I too have seen a lot of this misleading advertising on Facebook. I do believe that people on these networks though need to be more educated. The amount of friends I have on my Facebook friends list that still think that if they join certain applications that they will suddenly be able to see who has viewed their profile or similar scams is unbelievable. I myself know that this is not possible as it would go against Facebooks privacy rules.

  5. […] original post here: Facebook Launches Three Suits Against Affiliate Marketing Scams … This entry was posted in Uncategorized and tagged all-involving, considered-fraudulent-, […]

  6. Really time, that finally they are doing something against those spammers. It seems like, there is nothing on facebook than spams / scams!!
    Funny is, I received an email from maxbounty two weeks ago, to immediately stop all facebook traffic.
    They sent this to all affiliates of them!
    Will follow this one for sure

  7. Glad to see that Facebook is taking action, but will they win this one? Who knows, should be interesting to watch it unfold. They are protecting themselves, as they should, maybe now they will take a proactive approach to policing such things and they won't get as out of hand as the 3 cases above!

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    The other day, I left a comment on daily conversions and the owner never publishes my comment. At first, I taught, it was a mistake but, I realise, it was not a mistake. My comment is ban. You can view my comment I say nothing bad but I understand that…

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  10. I have to agree that I doubt it is about the money for FB, but more about brand reputation for them. Any money they may collect, if they win the cases, is more likely just icing on the cake. FB has won some major spam cases and settlements in the past. Only time will tell if they win these cases as well.

    I do think it should be a wake up call to networks that they need to take a longer view with regards to monitoring both their affiliates and advertisers.

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