Going Off-Topic – Amazon made me a victim of tax fraud & potential money laundering and I want answers!

I know this topic isn’t ETRM, CTRM or CM, but it is about internet security, identity theft, possible international money laundering and a corporation’s responsibility to address issues caused when they enable any of the above…so, bear with me…it is kind of intriguing stuff.

In fact, I would recommend dropping by the blog/website of famed internet security expert Brain Krebs (krebsonsecurity.com).  I spoke with him last week about this issue (thanks for the suggestion Mayank!) and much of what is in his blog about our conversation is repeated below…but, he’s a far better investigative reporter and writer than am I.  After reading his article, you may just want to skip ahead through my piece below to the bottom for my personal rant and few questions I have for Amazon. If you do business with any unit of Amazon – and really, who doesn’t? – I’m sure the answers would be interesting…though at this point, I’m pretty sure I’ll never get those answers from them.

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This “journey” started a couple of weeks ago when I received a 1099-misc. from Amazon’s On-Demand Publishing group (aka CreateSpace) indicating that they had paid me tens of thousands of dollars in 2017. Now, as people in this space may know, I am a credited author (aka Big Deal) on a few books on Amazon, but I don’t personally receive any royalties from those; and in fact, ComTech receives royalties only on the 2014 Year in Review book. The other two are owned by (now defunct) UtiliPoint.  Further, none of those books ever generated more than a few hundred dollars in any year.  I’ve never had an account with Amazon’s CreateSpace in my name nor have I ever given them any of my personal information from which they could produce a 1099.  So, in having received this 1099, it’s clear someone stole my credentials from somewhere and set-up an account with Amazon to avoid being held responsible for the taxes…which, of course, constitutes identity theft and tax fraud.

So, I started trying to reach Amazon to get this all straighten out…not an easy proposition.  On the 1099, they give you a phone number to call (which I suppose is required by the IRS), but it’s a voice mail box which told me to leave a message and they will get back to me in a couple of days.  I did.  I also sent an email to their 1099 email address that they also provided.  After about 3 days I got a call from them and told them what was going on…they said they would have to have someone from their fraud team call me.  After several more days I get a call from the fraud guy at Amazon and he tells me that “Yeah, it looks like fraud.”

“Ok,” I say, “Just send me a corrected 1099 so I don’t have to deal with the IRS because of Amazon’s screw-up in allowing an account to be set-up in my name using stolen credentials.” His reply was “No, we can’t do that because we can’t prove it was fraud.” He then says that all they can do is send me a letter saying that I told them I never received the money, and a form I can send the IRS to tell them that I’m claiming that I was a victim of ID theft.

Ok…so I tell him, “Well, if you can’t send me a corrected 1099, then you need to tell me what books the money is associated with and where you sent this money.”

“We can’t do that either.”

“Why?” I ask, “You’re telling me you’re not sure it wasn’t me that set-up the account, but you won’t tell me how the tens of thousands of dollars you say you paid me were generated or where they went?…You can’t have it both ways!”

“I’ll have to have a manager call you to tell you why we can’t tell you that.”  Great.

It’s now been a week and no word from the fraud manager at Amazon…but I do have a worthless letter from Amazon saying that they had talked to me about my contention that someone stole my identity and about how they are screwing me over (the letter doesn’t actually say that last part).

As a part of my trying to figure out what was going on in the days prior to hearing from a real live person at Amazon, I did a vanity search of my name on Amazon.  I found the 3 books that I’m credited as co-author on and one more…a book called “Lower Days Ahead” authored by a Patrick Reames, but most certainly not yours truly.  This book, posted to the site on Oct. 7, 2017, was priced at an absolutely stupid $440 per copy (and higher on other country specific Amazon sites).  I did the “sneak peek” on the inside and the book appeared to be some computer generated story, with no paragraph or chapter structure. Each sentence was in quotes and each was ended with a carriage return…not the way any human would write.  At that moment, it seemed to me that this “author” that shared my name was hoping some poor soul would be stupid enough to buy this fraud of a book and boom, they would get a healthy payday. No, at this point, I hadn’t really connected this book to my problem….I know I’m not the only Patrick Reames in the world, not even the only one in the US.  I was also sure that this ridiculous book wouldn’t ever sell enough copies to generate $10 in royalties, much less almost $25k – especially since it was only on Amazon’s site for 11 weeks total in 2017.

Now, back to the conversation with the Amazon fraud guy…he did tell me on the call that they had closed the account and taken down the book associated with it.  In my aggravated state during that call, I didn’t immediately make the association that he said “book”…not “books” as I had assumed that there would have to be many books tied to this account to generate that level of royalties.  I know from previous experience that an “average” book (say one priced at $24) published through CreateSpace would only generate around $2 for the author, meaning that it would take more than 10,000 books sold to make that kind of revenue. BTW…if you can sell more than 10,000 books in a year you should have a “real” publisher.

Anyhow, after I got off the phone with Amazon Fraud Guy, it struck me to look up that book again…and sure enough, it had been deleted from Amazon and most of their global sites – clearly indicating that this tome was the source of my pain.

Using Amazon’s own calculator, a book that sells for $440 would yield the author about $270, plus or minus.  This means that the fraudulent book, “Lower Days Ahead”, sold about 90 copies in 11 weeks.  Simply stated, there is no way in hell that 90 people in 11 weeks fell for this Amazon hosted scam.

After an additional few minutes thought, it occurred to me that the only purpose that could be served by this “book” and the account set-up with my credentials was to launder money…

Think of it this way, if I’m involved in an illicit activity (which, to be clear, I’m not) and I want clean money, I have to somehow figure out how to make that money come from a legitimate source.  In this case, I can “write” a book that requires no effort – I can have computer program write it or I can rip-off the “story” from any number of obscure places on the web.  Then, I just open an account on Amazon’s CreateSpace and upload the book and tell Amazon to price it at some stupid high price…and actually the higher the better. A stupid high price will keep the casual buyer, someone just looking for something to read on their next flight, from ever buying it and then complaining to Amazon about it being worthless garbage. Plus, that crazy price will provide me with a higher return each time the book, or multiple copies of it, is bought by someone with whom I am conducting my illicit business (i.e. selling guns, dealing drugs, funding terrorism…you can use your imagination).

Edit 02/23/18 – So at this point in my story, as an example of the questionable crap on Amazon, I had named an “author” of a bunch of books priced at about $2600 each on Amazon. Well, this “author” sent an email this morning telling me that she is a “…very a poor lady having no family children or even house,” and that she had “spent lots of money some how borrowing friends and well wishers on loan and started writing books and staying in some relatives home on their mercy…”.  She says she chose to publish her books on Amazon because its free.  Do I think that’s the real story? No. But, while curious how a homeless woman found her name buried in a blog with no linkback to her stuff on Amazon, I’m not here to clean up Amazon…I just want them to send me a corrected 1099! So, as a courtesy to this poor woman that writes $2600 books on everything from screenwriting to dog training to coding in Java and Hadoop, I have deleted that paragraph. 

So, here’s my rant…

Come on Amazon…you are the largest e-commerce platform in the world and have access to all the data in the world. You run AWS and claim it’s one of, if not the most secure clouds available. Your security and fraud teams should surely be the best in the world…

Given this, I have some questions for you Amazon (which I post here because you won’t give me the courtesy of calling me back as promised). I don’t really expect that I’ll get answers, but hey, I’m a glass half full kind of guy:

  1. What obligation do you have to prevent the use of stolen identities on your platforms that can used for purposes of tax fraud or money laundering?
  2. What steps do you take to ensure stolen identities/credentials/credit cards are not used on your platform?
  3. More specifically, if someone opens a seller account on one or more of your platforms, what steps do you take to ensure the credentials provided are valid and are not being used for tax evasion or fraud – meaning they belong to the individual opening the account…not me?
  4. What steps do you take to assist individuals who have been victimized by your failure to stop such occurrences?
  5. Do you monitor the sale of clearly fraudulent titles (priced at stupidly high prices) for purposes of limiting the use of your platforms for fraud and money laundering?
  6. Have you ever been contacted by law enforcement, including the FBI and Secret Service, about the potential use of your platform as a vehicle for tax fraud or money laundering? If so, what steps have you taken to ensure such activities cannot occur on those platforms?

I have more questions, but frankly this crap is consuming too much time and energy to deal with any more today. I have to go lock down access to my accounts with multiple credit reporting agencies, file a report with the FTC and law enforcement, and notify the IRS.

And oh yeah, I’ll have to deal with all this again in 2019 since they didn’t shut down my fraudulent doppelganger until just last week..meaning a 2018 1099 will be coming my way. So, I’ve got that to look forward to. Thanks a lot, Amazon.

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