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Let people be stupid.

I don't play games such as this, but it seems obvious to me that these sorts of scams are going to happen whenever there is a real dollar value associated with in-game currency. This sort of thing wouldn't happen if the makers of Second Life would remove the exchange rate between Linden dollars and USD; and even if it did happen, it wouldn't really be news.

One more point: How can the makers of this game do this without running afoul of the banking regulations of various nations, especially if you can buy/sell Linden dollars directly from the company itself?

Are Ponzi schemes in Second Life legal? Did the 'scammers' get to keep the money?

So, any anonymous Joe Schmoe can open a Bank in Second Life? And people are surprised when they give money to a stranger and something like this happens? Well shit, maybe I should start playing the game and create my own bank! You know you can trust me because I'm playing the same game you are! That makes us almost like kin!

How does second life still drum up this much publicity? Its nothing but over hyped marketing and furries looking for some sort of acceptance. If you don't talk about it, second life will disappear.

There's an interesting article by the RuneScape development team on the problems scammers and real world traders cause for the game and about possible solutions that they are implementing:
http://www.runescape.com/kbase/view.ws?guid=diary06 [runescape.com]

Excerpts:
The majority of bots that we ban from members have been paid for with stolen credit card numbers.
Such accounts don't earn us money, they cost us money in bank refund charges.

During 2006, we banned bot and real-world trader accounts carrying RuneScape gold and items worth over 200 billion gp. During 2007, so far, we've banned over 525 billion, which has a real-world value of over $2.6 million US - that's an increase of over 250%.

I have a real hard time feeling very sympathetic to most of these people being scammed. These types of scams typically rely on the victim allowing greed to shut down their brain. I am normally one to be pretty vicious towards the scammers in things like credit cards and predatory lending, because often enough it isn't exploiting greed and get rich quick schemes so much as it is a genuine fraud and manipulation. This subprime crap and scams like this are almost exclusively greed driven on the part of the victim. Listen to the radio and you will hear dozens of commercials per day on how to get rich quick in real estate, flipping houses, or whatever other genious plan being sold. I can't imagine why someone selling real estate would try to sell a system of how to get rich by buying real estate...

Ginko's exchange rates only made sense if inflation was high too. The economy was being manipulated and Linden Labs was "printing" more money [wikipedia.org]. But given Wikipedia's description of what happened, it appears exactly like what happened in the US not too long ago. The "government" changed a law about the legality of internet gambling, and this instantly caused the deaths of several companies. It's actually kind of interesting to watch how a virtual currency behaves and how to create an economic system even within a game like this.

--
Our microcontroller kit. Your gcc compiler. Learn digital electronics. [nerdkits.com]

We're all well aware of the scams that sometimes happen in online games like Eve Online. But despite this looking primarily like a problem with Eve Online [..]

(emphasis mine)

Uhmmmm, hello?

Eve Online is specifically designed to have a player-driven economy and market. As in real life, it is possible to scam people in such a market. This is not just allowed in Eve online, it has in fact been close to actively encouraged (as in, people have asked devs/GM's whether it's ok to do certain things, and got a reply that amounts to "if it's not obviously prohibited by the EULA, go right ahead". It has made for some nice stories as well, some people may remember the story about the Eve Intergalactic Bank [slashdot.org] piramid scam.

The devs consider this kind of thing to be exactly as intended and have even stated so in public forums. So yes, it's a harsh game. It is actually possible to lose the work of several months in a matter of minutes.

Of course, there are still rules/an EULA, for example it's not OK to phish for account details, to sell or buy in-game money for real-world money, etc. However, if you manage to convince hundreds of people that they should invest in your piramid scheme, you should absolutely go right ahead.

I'm an avid SL resident, and have been vocal about the Ginko subject in the SL community forums on numerous occasions.

Basically, as many have said there and elsewhere, when you participate in one of these "banks", you give your money to someone. That's how LL sees it. You are GIVING your money to someone. Whether they give it back or not, let alone pay you any extra for the privilege, is gratis, and they have no intention of doing anything about it if the owner of bank X up and disappears with the money. ANYone can set up ATM machines anywhere and do what Ginko did. Well, they can't any more, as people have already been burned and are wary, but there are still many naive people out there who will blithely go up to an ATM, see flowery words and fabulous interest rates, and deposit every L$ in their account, never suspecting that it isn't a "real" bank.

Yes, it is only "virtual money". Any real world value it holds is subject to change at any time. Most cases, it isn't a lot of money that is lost in these scams. It's an expensive lesson to learn, but it is far from life-breaking for anyone.

What is kind of telling is that LL does stop pyramid schemes and other such money scams, but does nothing to stop Ponzi schemes, like Ginko's (not-so-affectionately called the "Porto-Ponzi" in the SL forums). Ponzi schemes are a variation on pyramid schemes and, if one is regulated, the other should be as well. It is left as an exercise to the reader why LL can't seem to fathom this concept and put an end to SL "banks".

In the end, though, it is and should remain caveat emptor. In some ways, I think it is a good training ground for RL. The money involved is often nothing more than discretionary income for most folks, so losing it shouldn't hurt any more than losing it in a poker game. There's more than enough wisdom out there for people to obtain and investigate before giving their money to anyone. Whether they choose to ignore it falls squarely on their shoulders and no one else's.

I simply don't consider a crime (in the real world) to scam someone out of fake money in a game that aims to similate a large universe with a full economy and social structure. Just like there are players who will "Pod" you, there are those who will scam you. Just the way the game works. It creates a great atmosphere and drama, IMO. The Eve scams that I recall were particularly entertaining because they were so elaborate.

That said, I'm all for IN GAME solutions to the problems like having scammers arrested or have bounties on their heads or something, but there's no need to take it to RL and make it a legal issue.

-matthew

...nature's way of telling you that you're a dumbass.

It's financial Darwinism. And, as mentioned many times, the best cons take advantage of someone who "THINKS" that they are scamming someone else, to get something for nothing.

If you are SO gullible, that you think the widow of a Nigerian minister will out of the blue contact you to help claim $millions in aid money, then you, sir or madam, are a dumbass. I don't care if you're a blue-haired granny who makes wonderful cookies for your grandchildren and always is willing to help someone down on their luck.

Dumbass doesn't mean "bad", it just means stupid. And you can't legislate against stupidity. You can apparently ELECT it, but you can't legislate against it.

The moral of this of course, is that if granny gets taken to the cleaners, then perhaps her family shouldn't have let granny so loose on the financial leash, should they? And the upshot of that? Pay attention to the people you care about. Be interested in them and their lives, in what they're doing. If they're going off the rails and you care about them, get involved.

LL or CCP (makers of EVE) can stop this the same way real credit card companies find fraud. Velocity.

Given that all monetary transactions go through a single transaction system. Those transactions can be monitored by a set of fraud rules. I'll use EVE as an example, since I play the game. Rules would be like:

- Player donations into an account of X ISK over Y hours exceeds Z
    (probably hacked accounts feeding a central account)

- Player donations out of account of X ISK to more than Y different players
    (probably an ISK-seller)

- Player donations into an account from more than X players over Y hours
    (could be ponzi schemes)

Each scam that comes up will have a pattern in monetary transactions that can be flagged using these rules. once an account is flagged, a security representative can review the specifics of the account and determine if it is potentiall fraud, and perhaps suspend the account.

Human interaction is critical here, because the rules are not perfect. For example, the last rule would trigger for most EVE-Radio DJs that run lottos during their on-air time. A perfectly legitimate concept. That where the addition of a white list becomes useful.

A few hours or days with an "expert" who works for a major bank would help curb these issue somewhat. The bad news is, these systems only work when installed in the core of the transaction system. Only LL/CCP can solve this problem, and they have to WANT to solve it.