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Agents typically demand that authors sign over complete control of their royalties to them so that their money comes from the agent rather than from the publisher directly. I know a certain author named Dean Wesley Smith who has spoken a lot about how agents often steal from authors and exploit them. How do authors safeguard against being taken advantage of and ripped off by them, given that they control their royalties?

Also, even if the author has no agent and is getting his/her royalties directly from a small publisher, how does the author also ensure that this small publisher is not stealing from them and giving them misleading information about sales of the book?

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How can you be sure your employer is telling the truth when she says there's no money for bonuses this year? Or your local farmer's market farmer who says the early rain messed with the harvest and that's why the squash is twice the price it was last week?

How can you be sure that a writer, famous for books about how authors should follow his advice to sell their work and not rely on agents, isn't overestimating the extent of fraud?

Sometimes you trust people (or not) due to the social contract, to the trust you place in society. If they're lying to people, it will come out. Other times you trust the literal contract. If they're lying to you, they're breaking the law and there are a lot worse repercussions to that than just losing your trust.

The examples you give are outright fraud. Completely illegal. That's the sort of thing that people don't tend to take lightly. I have no idea what the likelihood of this level of fraud is, but it's probably quite small.

Ask to see the numbers. Verify pieces of data as you can. Run the math yourself. Speak up about discrepancies. Talk with other authors using the same publisher or agent. Ask around about the agent/publisher (before using them if possible, but any time is helpful). Look them up on the internet. Disgruntled customers aren't shy.

Use your writing networks to find publishers and agents with good reputations. Report any suspicious behavior to writer's organizations and ask for help. If you have evidence of lawbreaking, report it to authorities (in the US we are forced to use courts for basic stuff like this, in other countries, the process may be different). Don't let it go if you're in the right. You will help other writers too.

Trust but verify.

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    @user394536 you've left the same comment twice and it's been deleted twice. Your opinion has been heard and the author has chosen not to make changes based on it, so please don't leave it again. – Monica Cellio May 1 at 14:45

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