Amazon unwittingly serves as a means to launder money via self-published books
The Authors Guild has raised a warning flag about money-laundering activity at CreateSpace. The self-publishing arm of Amazon sent Patrick Reames, an author of specialized books on the commodities industry, a US tax form 1099 reporting earnings of $24,000 on the self-published book Lower Days Ahead—selling for $555 per copy. But Reames has never self-published any book at all, let alone the title Lower Days Ahead, which is little more than computer-generated text with no chapters or paragraphs. This issue first surfaced in an article by investigative newswriter Brian Krebs (formerly of the Washington Post) at his website, Krebs on Security.
The mechanism of the fraud: stolen credit or debit cards are used to buy the faux book, with the scammer pocketing the royalties. The Authors Guild estimates that it must have taken around 90 fraudulent sales at the 60 percent CreateSpace rate to add up to a $24,000 haul. Apparently the perpetrator of the fraud was able to provide Reames’s Social Security number to Amazon, though Reames didn’t have a personal account; his earlier, legitimate books were distributed through his publisher.
There appears to be no way to tell who was behind this; Amazon didn’t release to Reames any information as to who may have received the alleged royalty payments. And as Reames tells it, there’s been little help from the retailer in correcting the 1099.
Bottom line: Possibly thanks to the coverage from Krebs, Amazon has established an email address for anyone with an Amazon-related 1099 issue: 1099@amazon.com. While the Authors Guild rightly suggests that “authors should pay close attention to 1099 forms that come from unexpected sources, including Amazon and CreateSpace,” we’d also suggest that authors occasionally check their names on retail sites to see if bogus titles come up. An early catch could help shut down a scam before the IRS calls.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
