Combating money laundering with free books

Well that’s a weird title, isn’t it? But it turns out that Amazon is an excellent place for all kinds of commerce: buying goods, selling services (Mechanical Turk, hello!). Oh yeah, and money laundering. One author recently discovered some of his titles were being used as part of a money laundering scheme. Since Amazon is essentially unwilling to do anything about it, he did the only thing he could: he made the books free.

Of course, that won’t stop people from “selling” used copies for large sums of money. It does give people who are actually interested in the book a way to get it for free. And by driving people to his website instead of Amazon, he helps readers avoid the illegitimate listings. But I suspect most people go to Amazon first when they’re looking for a book (or just about anything else). In that case, visitors are more likely to find the illegitimate, expensive copy and give up.

No matter what the effect on readers, there’s a clear effect on Mr. Faber: he’s not making money. Faber probably doesn’t need the money from book sales. As the co-founder and Chief Investment Officer of an investment company, he’s probably doing pretty well. But someone who makes their living – or at least a substantial portion of their living – from book sales has more to lose doing this.

Of course, authors shouldn’t be the ones to fight Amazon’s fraud problems. The last I heard, Amazon has a few dollars that they could throw at it. On the other hand, they get a cut of the money that gets laundered, too. It’s in their (short-term) financial interests to try not to notice this. The only real losers I see are the banks who have to cover the losses from the stolen cards (and the poor saps who get stuck with the bogus 1099). Could the banks put pressure on Amazon to fix it? Or will it require a big fine from the feds?