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<channel>
<title>Techdirt. Stories filed under &quot;scams&quot;</title>
<description>Easily digestible tech news...</description>
<link>http://www.techdirt.com/</link>
<language>en-us</language>
<image><title>Techdirt. Stories filed under &quot;scams&quot;</title><url>http://www.techdirt.com/images/td-88x31.gif</url><link>http://www.techdirt.com/</link></image>
<item>
<pubDate>Thu, 14 Feb 2013 17:00:00 PST</pubDate>
<title>DailyDirt: Cheaters Sometimes Prosper...</title>
<dc:creator>Michael Ho</dc:creator>
<link>http://www.techdirt.com/articles/20101116/10522911886/dailydirt-cheaters-sometimes-prosper.shtml</link>
<guid>http://www.techdirt.com/articles/20101116/10522911886/dailydirt-cheaters-sometimes-prosper.shtml</guid>
<description><![CDATA[ If you're going to commit a crime, there's a certain amount of logic to trying to pull off the biggest crime you can. Why risk going to jail over a relatively small amount of money? If you can get away with a multi-milion dollar heist, you only have to do it once (if you're not too greedy). And if you get caught, you might have the resources to escape the authorities. Here are just a few examples of some scams that might have demonstrated that crime can pay.

<ul>

<li> <a title="http://www.nytimes.com/2012/02/18/world/europe/italy-arrests-8-in-fake-us-treasury-bonds-scam.html?_r=1&#038;" href="http://nyti.ms/XrSGfC">In 2012, Italian police arrested 8 people related to a scheme involving $6 trillion (yes, trillion) in fake US Treasury bonds.</a> According to US authorities, these kinds of documents are part of a growing trend of "fictitious instrument fraud" where fake securities are used as collateral in a scam aimed at unwitting investors. [<a href="http://www.nytimes.com/2012/02/18/world/europe/italy-arrests-8-in-fake-us-treasury-bonds-scam.html?_r=1&#038;">url</a>]</li>

<li> <a title="http://tech.fortune.cnn.com/2012/12/05/rochdale-securities-apple-miller-fraud/" href="http://bit.ly/TQWZRG">How often do traders misplace a decimal point on purpose?</a> David Miller would have made a killing buying 1.625 million shares of AAPL (instead of 1,625 shares!) if the stock beat its estimates, but Apple's shares actually fell... oops. [<a href="http://tech.fortune.cnn.com/2012/12/05/rochdale-securities-apple-miller-fraud/">url</a>]</li>

<li> <a title="http://www.bloomberg.com/news/2013-01-28/libor-lies-revealed-in-rigging-of-300-trillion-benchmark.html" href="http://bloom.bg/YXkCLf">The London interbank offered rate (aka Libor) is a global benchmark for financial instruments worth over $300 trillion -- and it's part of one of the largest and longest-running banking scams in history.</a> Traders at several large banks colluded to manipulate Libor for years... because bankers were trusted to report honest numbers. hmm. [<a href="http://www.bloomberg.com/news/2013-01-28/libor-lies-revealed-in-rigging-of-300-trillion-benchmark.html">url</a>]</li>

</ul>


If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) <a title="http://www.stumbleupon.com/to/stumble/stumblethru:www.techdirt.com" href="http://bit.ly/fagV8c">Techdirt post</a>.<br /><br /><a href="http://www.techdirt.com/articles/20101116/10522911886/dailydirt-cheaters-sometimes-prosper.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20101116/10522911886/dailydirt-cheaters-sometimes-prosper.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20101116/10522911886/dailydirt-cheaters-sometimes-prosper.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>urls-we-dig-up</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20101116/10522911886</wfw:commentRss>
</item>
<item>
<pubDate>Thu, 7 Feb 2013 17:00:00 PST</pubDate>
<title>DailyDirt: Mostly Harmless Scams...</title>
<dc:creator>Michael Ho</dc:creator>
<link>http://www.techdirt.com/articles/20101111/18085511825/dailydirt-mostly-harmless-scams.shtml</link>
<guid>http://www.techdirt.com/articles/20101111/18085511825/dailydirt-mostly-harmless-scams.shtml</guid>
<description><![CDATA[ There's cheating, and then there's cheating. There are obviously bad scams that hurt people or involve the loss of significant amounts of money or property, but some scams are hurtful on a much smaller scale. Here are just a few notable examples of some cheaters who were caught red-handed.

<ul>
<li> <a title="http://www.grantland.com/story/_/id/8362701/the-evolution-cheating-chess" href="http://es.pn/WTNuy7">Now that computers are better than humans at playing chess, it shouldn't be too surprising that chess engines are being caught in use in human vs human tournaments.</a> One teenager was found using the Fritz chess engine during competition, and it could mean future chess tournaments will be held without any kind of technology near the competitors. [<a href="http://www.grantland.com/story/_/id/8362701/the-evolution-cheating-chess">url</a>]</li>

<li> <a title="https://securityblog.verizonbusiness.com/2013/01/14/case-study-pro-active-log-review-might-be-a-good-idea/" href="http://bit.ly/WRLutf">A mid-40s software developer was caught outsourcing his job to a team of programmers in China (for about a fifth of his annual salary).</a> And he would have gotten away with it, too, if he'd just covered his tracks a bit better. [<a href="https://securityblog.verizonbusiness.com/2013/01/14/case-study-pro-active-log-review-might-be-a-good-idea/">url</a>]</li>

<li> <a title="http://www.theatlantic.com/national/archive/2012/05/how-the-professor-who-fooled-wikipedia-got-caught-by-reddit/257134/" href="http://bit.ly/UGjM4e">Prof T. Mills Kelly taught a class at George Mason University that encouraged undergraduates to enter fake information into Wikipedia.</a> Don't believe everything you read, kids... [<a href="http://www.theatlantic.com/national/archive/2012/05/how-the-professor-who-fooled-wikipedia-got-caught-by-reddit/257134/">url</a>]</li>

</ul>


If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) <a title="http://www.stumbleupon.com/to/stumble/stumblethru:www.techdirt.com" href="http://bit.ly/fagV8c">Techdirt post</a>.<br /><br /><a href="http://www.techdirt.com/articles/20101111/18085511825/dailydirt-mostly-harmless-scams.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20101111/18085511825/dailydirt-mostly-harmless-scams.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20101111/18085511825/dailydirt-mostly-harmless-scams.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>urls-we-dig-up</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20101111/18085511825</wfw:commentRss>
</item>
<item>
<pubDate>Tue, 29 Jan 2013 20:00:00 PST</pubDate>
<title>Feds Seize Legit 49ers Merchandise, But Apparently Unconcerned About Actual Fraud In Ticket Sales</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20130129/10471821817/feds-seize-legit-49ers-merchandise-apparently-unconcerned-about-actual-fraud-ticket-sales.shtml</link>
<guid>http://www.techdirt.com/articles/20130129/10471821817/feds-seize-legit-49ers-merchandise-apparently-unconcerned-about-actual-fraud-ticket-sales.shtml</guid>
<description><![CDATA[ Sometime in the next few days -- perhaps Thursday or Friday -- expect that ICE and the DOJ will announce excitedly how they've seized another hundred or so websites that they'll claim were selling counterfeit NFL merchandise -- and maybe a couple sites that were planning to embed streams of the game.  It's become a <a href="http://www.techdirt.com/articles/20120202/12374117639/ice-seizes-300-more-sites-cant-have-people-watching-super-bowl-ads-without-permission.shtml">Super Bowl Weekend tradition</a> because the feds have nothing better to do, apparently.  Two local stories that came out this morning, however, suggest that the feds' priorities are out of whack.  According to a CBS morning radio report in San Francisco, Homeland Security <a href="https://soundcloud.com/mmasnick/feds-seize-legit-49ers" target="_blank">raided</a> a guy selling 49ers merchandise on the street corner at a gas station.  They told him that they knew he was selling counterfeit material and seized it... only to find out soon after that <a href="http://sanfrancisco.cbslocal.com/2013/01/29/sweep-for-counterfeit-49ers-gear-comes-up-empty/" target="_blank">the merchandise was legit</a>.  Way to do your research, Homeland Security:
<center>
<iframe width="300" height="166" scrolling="no" frameborder="no" src="https://w.soundcloud.com/player/?url=http%3A%2F%2Fapi.soundcloud.com%2Ftracks%2F76991783&color=ff6600&auto_play=false&show_artwork=false"></iframe>
</center>
Meanwhile, at the same time, there was actual fraud going on, as someone who spent $5,900 on Superbowl tickets on Craigslist <a href="http://www.mercurynews.com/49ers/ci_22468715/super-bowl-ticket-scam-5900-buys-go-ravens-note?source=rss" target="_blank">was scammed</a> and sent a note that just said "Goo Ravens!!! LOL" instead.
<center>
<a href="http://imgur.com/uafPtbz"><img src="http://i.imgur.com/uafPtbz.jpg" /></a>
</center>
Amazingly, the guy who sent that put a return address on the package and had spoken to the buyers a bunch on the phone.  So you would think that, perhaps instead of swooping down on legitimate vendors selling legitimate goods, perhaps law enforcement could be out there arresting folks like this scammer instead.  But, I guess that kind of stuff isn't as important to big companies like the NFL.<br /><br /><a href="http://www.techdirt.com/articles/20130129/10471821817/feds-seize-legit-49ers-merchandise-apparently-unconcerned-about-actual-fraud-ticket-sales.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20130129/10471821817/feds-seize-legit-49ers-merchandise-apparently-unconcerned-about-actual-fraud-ticket-sales.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20130129/10471821817/feds-seize-legit-49ers-merchandise-apparently-unconcerned-about-actual-fraud-ticket-sales.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>priorities</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20130129/10471821817</wfw:commentRss>
</item>
<item>
<pubDate>Fri, 2 Nov 2012 17:33:00 PDT</pubDate>
<title>Paul Ceglia's Case For 50% Of Facebook Falls Apart Soon After He's Arrested For Fraud</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20121102/16294720922/paul-ceglias-case-50-facebook-falls-apart-soon-after-hes-arrested-fraud.shtml</link>
<guid>http://www.techdirt.com/articles/20121102/16294720922/paul-ceglias-case-50-facebook-falls-apart-soon-after-hes-arrested-fraud.shtml</guid>
<description><![CDATA[ For a few years now, we've covered the situation with Paul Ceglia, a guy who once hired a young Mark Zuckerberg to do some programming work for him, claiming that Zuckerberg did a deal to provide half of Facebook to Ceglia.  The <a href="http://www.techdirt.com/articles/20100720/15472010291.shtml">details</a> were a little weird, but Ceglia was able to bring on some high powered lawyers, the types who usually don't take on bogus cases.  Of course, then that law firm eventually looked at the details and <a href="http://www.techdirt.com/articles/20110628/16084214892/paul-ceglias-big-time-law-firm-drops-him-his-case-to-claim-ownership-giant-chunk-facebook.shtml">dropped him</a>.  In fact, it seemed like he had trouble keeping lawyers.  Facebook grew progressively more aggressive in arguing <a href="http://www.techdirt.com/articles/20110526/22222014447/facebook-once-again-says-that-ceglias-claim-to-own-84-facebook-is-fraud.shtml">outright fraud</a> and presented ever increasing <a href="http://www.techdirt.com/articles/20110816/04160615542/original-contract-used-paul-ceglia-to-claim-facebook-ownership-doesnt-mention-facebook.shtml">evidence</a> that the whole thing was a complete <a href="http://www.techdirt.com/articles/20120222/17285417843/if-youre-accused-trying-to-scam-facebook-out-50-its-equity-probably-dont-have-email-account-named-getzuck.shtml">sham</a>.
<br /><br />
While the case was clearly flopping, the last week has not been a good one for Ceglia.  Late last week he was <a href="http://news.cnet.com/8301-1023_3-57541179-93/feds-arrest-paul-ceglia-for-alleged-multibillion-dollar-fraud-against-facebook/" target="_blank">arrested by the feds</a> for the supposed fraud in the case, and if that wasn't enough to deal with, his case against Facebook & Zuckerberg looks to be (unsurprisingly) closer to <a href="http://news.cnet.com/8301-1023_3-57544580-93/facebook-wins-another-round-against-paul-ceglia/" target="_blank">falling apart completely</a> after the court has decided that the extremely damning evidence of fraud can be discussed in the case.<br /><br /><a href="http://www.techdirt.com/articles/20121102/16294720922/paul-ceglias-case-50-facebook-falls-apart-soon-after-hes-arrested-fraud.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20121102/16294720922/paul-ceglias-case-50-facebook-falls-apart-soon-after-hes-arrested-fraud.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20121102/16294720922/paul-ceglias-case-50-facebook-falls-apart-soon-after-hes-arrested-fraud.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>yeah,-that's-not-going-to-go-well</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20121102/16294720922</wfw:commentRss>
</item>
<item>
<pubDate>Wed, 5 Sep 2012 09:19:00 PDT</pubDate>
<title>Big Banks Finally Punishing Employees For Fraud... Like The Call Center Guy Who Used A Fake Dime 50 Years Ago</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20120905/00533920276/big-banks-finally-punishing-employees-fraud-like-call-center-guy-who-used-fake-dime-50-years-ago.shtml</link>
<guid>http://www.techdirt.com/articles/20120905/00533920276/big-banks-finally-punishing-employees-fraud-like-call-center-guy-who-used-fake-dime-50-years-ago.shtml</guid>
<description><![CDATA[ Wells Fargo, of course, was one of a bunch of the big banks heavily involved in questionable activities that brought the world to the precarious economic conditions we're still living in today.  Just a few weeks ago, the company <a href="http://www.huffingtonpost.com/2012/08/14/wells-fargo-sec_n_1775944.html" target="_blank">settled charges</a> that it had misled cities and non-profits when selling them risky securities without disclosing the risks.  The company gets a slap on the wrist -- without having to admit guilt -- and one executive (again without admitting guilt) gets a six month suspension.  Have you heard about any top execs at any of the banks getting fired for financial malfeasance?  No?  Well, perhaps it's because they're focusing on the <i>real</i> trouble makers.  Like Richard Eggers.  49 years ago, Eggers, as a teenager, tried to stick a cardboard cutout of a dime into a washing machine.  He didn't get away with it at the time, and was arrested for fraud.  He somehow put his life back together and, until recently, was a phone customer service agent for Wells Fargo.
<br /><br />
And now he's really paying the piper: Wells Fargo has <a href="http://newsfeed.time.com/2012/09/02/wells-fargo-fires-employee-who-committed-10-cent-fraud-in-1963/" target="_blank">just fired him for the decades-old incident</a> that, again, involved <i>a dime</i>.  Even accounting for inflation, we're talking about <i>a dime</i>.  However, thanks to supposedly "tough" new regulations concerning financial institutions, barring them from employing execs convicted of fraud, Wells Fargo is claiming that it had to fire Eggers.
<blockquote><i>
&#8220;We don&#8217;t have discretion to grant exceptions in situations like this. Once we find out someone has a criminal history of dishonesty or breach of trust we can no longer employ them.&#8221;
</i></blockquote>
Eggers has responded by <a href="http://blogs.desmoinesregister.com/dmr/index.php/2012/09/04/wells-fargo-employee-fired-for-cardboard-dime-files-civil-rights-complaint/" target="_blank">filing a civil rights complaint</a> against the company and federal regulators.  He and his lawyers are hoping to turn it into a class action lawsuit, as apparently a number of other employees at banks have lost their jobs under these rules.  Actual execs responsible for the financial crisis?  Not so much.
<br /><br />
This is yet another case where laws like this must "sound good at the time" to the policy makers putting them together without any sense of who it will really impact.  And the end result is that we sure are making Mr. Eggers "pay" for that dime stunt in 1963, huh?<br /><br /><a href="http://www.techdirt.com/articles/20120905/00533920276/big-banks-finally-punishing-employees-fraud-like-call-center-guy-who-used-fake-dime-50-years-ago.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20120905/00533920276/big-banks-finally-punishing-employees-fraud-like-call-center-guy-who-used-fake-dime-50-years-ago.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20120905/00533920276/big-banks-finally-punishing-employees-fraud-like-call-center-guy-who-used-fake-dime-50-years-ago.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>rules-are-rules?</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20120905/00533920276</wfw:commentRss>
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<item>
<pubDate>Tue, 4 Sep 2012 13:34:00 PDT</pubDate>
<title>Dear Sir, I Am A Nigerian Prince And If You Believe That There's A Bridge I'd Like To Sell You...</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20120901/22174020252/dear-sir-i-am-nigerian-prince-if-you-believe-that-theres-bridge-id-like-to-sell-you.shtml</link>
<guid>http://www.techdirt.com/articles/20120901/22174020252/dear-sir-i-am-nigerian-prince-if-you-believe-that-theres-bridge-id-like-to-sell-you.shtml</guid>
<description><![CDATA[ I'm no longer surprised that people fall for Nigerian advance fee "419" scams.  It seems that every generation falls for something along those lines.  In the past, I've talked about the bogus story of <a href="http://www.techdirt.com/articles/20051120/2335221.shtml">Drake's fortune</a>, which was the "Nigerian scam" of nearly a century ago.  But what certainly has surprised me is how little the story really seems to change.  Given how closely so many people associate "Nigerian prince" with "scam," you'd think that it would make sense for scammers to move away from such things, and try to find a story that is slightly more realistic.  However, <a href="http://www.onthemedia.org/2012/aug/31/why-nigerian-email-scams-work/" target="_blank">On the Media</a> points us to a fascinating <a href="http://research.microsoft.com/pubs/167719/whyfromnigeria.pdf" target="_blank">research paper by Microsoft researcher Cormac Herley</a>, and a <a href="http://online.wsj.com/article/SB10000872396390443931404577548813973954518.html" target="_blank">Wall Street Journal article about the research</a>, which reveal why it still makes sense for Nigerian scammers to say they're from Nigeria:
<br /><br />
<b>It weeds out all the non-suckers.</b>
<br /><br />
Think about it from the scammer's point of view.  With advance fee scams, they need to string along someone for a while.  A live sucker can be quite valuable, but also involves quite a bit of work.  So, for it to be worthwhile, they actually <i>need <b>exceptionally</b> gullible people</i> and by flat out saying they're from Nigeria, given how closely associated that country is with such scams, they quickly weed out the people who are probably smart enough to realize they're getting conned.  Since the cost to them of spamming everyone is close to nothing, <i>you</i> may be confused about why you keep getting "Nigerian prince" emails, but they don't care about you.  In fact, in ignoring those emails, you're kind of doing them a favor by <i>not</i> bothering them with time-consuming efforts that won't pay off.
<br /><br />
As the WSJ piece notes, this highlights a potentially better way to deal with such scammers: waste their time.  Of course, we've written about such <a href="http://www.techdirt.com/articles/20090809/1116085818.shtml">scambaiters before</a>, with <a href="http://www.419eater.com/" target="_blank">419 Eater</a> being the most well known community.  But this research suggests that, not only are such efforts amusing, they can be genuinely effective in harming the economics of such advance-fee frauds.<br /><br /><a href="http://www.techdirt.com/articles/20120901/22174020252/dear-sir-i-am-nigerian-prince-if-you-believe-that-theres-bridge-id-like-to-sell-you.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20120901/22174020252/dear-sir-i-am-nigerian-prince-if-you-believe-that-theres-bridge-id-like-to-sell-you.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20120901/22174020252/dear-sir-i-am-nigerian-prince-if-you-believe-that-theres-bridge-id-like-to-sell-you.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>aha!</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20120901/22174020252</wfw:commentRss>
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<item>
<pubDate>Fri, 24 Aug 2012 15:19:02 PDT</pubDate>
<title>And... The Bureaucrats Begin Spreading FUD About Crowdfunding</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20120823/01035920130/bureaucrats-begin-spreading-fud-about-crowdfunding.shtml</link>
<guid>http://www.techdirt.com/articles/20120823/01035920130/bureaucrats-begin-spreading-fud-about-crowdfunding.shtml</guid>
<description><![CDATA[ We've been waiting patiently for quite some time now to see the SEC's "rules" for equity crowdfunding.  As you hopefully recall, earlier this year, the JOBS Act became law, and one part of that was the legalization of certain forms of crowdfunding for equity (i.e., ownership of a company).  You're probably already familiar with crowdfunding for things like pre-sales.  And you may be familiar with things like crowdfunding loans, via services like Prosper and LendingClub.  The JOBS Act is supposed to enable a different form of crowdfunding: for equity investments.  Thus, in theory, a startup could not just let people pre-pay for a product they're developing, but could also actually purchase a tiny bit of stock in a company.  Other countries already have this, but in the US it went against SEC regulations concerning the hoops you have to jump through to offer any of your equity to the public, rather than just a smaller group of accredited investors.
<br /><br />
There's been a fair amount of talk about this effort, and a bunch of companies chomping at the bit to get into the market once crowdfunding for equity is officially in place.  The main holdup?  The SEC.  As part of the law, the SEC is supposed to put forth rules for how such crowdfunding can work.  But the SEC made it quite clear before the law passed that <i>it didn't like this idea</i> -- not one bit.  So I've been quite curious to see what rules it would eventually put out... and so far all it's done is keep stalling.  The rules were supposed to come out yesterday (which was already postponed from the original date), but instead, the SEC <a href="http://www.wired.com/business/2012/08/sec/?utm_source=feedburner&#038;utm_medium=feed&#038;utm_campaign=Feed%3A+wired%2Findex+%28Wired%3A+Top+Stories%29" target="_blank">pushed things back another week</a>.
<br /><br />
While everyone waits for the SEC rules, various state securities regulators, in the form of the North American Securities Administrators Association (NASAA), are ramping up the FUD about such equity crowfunding.  They released a report on the top investment scams... and <a href="http://www.huffingtonpost.com/2012/08/22/crowdfunding-tops-nasaas-_n_1821730.html" target="_blank">crowdfunding in general is near the top of the list</a>.  They seem especially worried that the space is quickly going to be overcome by fraud:
<blockquote><i>
"The number of entities out there already pitching themselves as crowdfunding entities online has risen in a significant fashion," said Matt Kitzi, NASAA Enforcement Section Chair and Missouri Securities Commissioner. "Just look at web domain names: it has gone from a couple hundred to well over 1,600 in the past year. They are staking up a position to enter crowdfunding market. There will be a lot more to come on this."
<br /><br />
In early in August, the Massachusetts Securities Division charged a Lowell, Massachusetts man for a crowdfunding scam, bilking 20 investors who thought they were investing money in a gaming site of $153,396.
<br /><br />
Secretary of the Commonwealth William Galvin, who brought the case, wrote to the SEC urging regulators not to let the JOBS Act changes become a tool for financial fraud and abuse. "Longstanding problems in the markets for small and speculative stocks show the pitfalls of relying on the wisdom of crowds."
</i></blockquote>
Here's the thing: there are always scammers out there.  And that's going to be a big part of the challenge for any of the platforms that are jumping into the equity crowdfunding space to deal with.  They're going to have to distinguish themselves by how they enable trust between buyers and sellers and how they prevent fraud.  But, some fraud is going to happen -- just as some fraud is always going to happen in just about any market.  That doesn't mean we don't let the market itself develop.
<br /><br />
In the end, I'm guessing that the SEC rules will be fairly strict, and may limit this kind of market.  Also, contrary to some expectations, I doubt that many will see this as a true replacement for angel or VC financing.  It seems like the sort of thing that will likely be more useful for <i>small businesses</i> (such as local businesses) rather than traditional <i>high growth enterprises</i> which are the kinds of "startups" that usually attract angel and venture money.  Surely, some people will set up scams and get tricked.  But there have been scams in the startup world for ages, and there are likely already some scams that have made it through existing crowdfunding platforms.  But that's the nature of risk.  Sometimes you lose.
<br /><br />
While most people focus on how this will compete with angels and VCs, I'd think that it's much more a form of competition for the crowdlending platforms, since those are more about investment as well, just with debt financing, rather than equity financing.  And while there certainly have been cases of fraud that came about because of those platforms, for the most part it hasn't sunk the top players in that space, because they've been able to try to minimize the likelihood of fraud while educating the market on investing wisely.  There's nothing to suggest that the top players who emerge in the equity crowdfunding realm won't be able to do the same.<br /><br /><a href="http://www.techdirt.com/articles/20120823/01035920130/bureaucrats-begin-spreading-fud-about-crowdfunding.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20120823/01035920130/bureaucrats-begin-spreading-fud-about-crowdfunding.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20120823/01035920130/bureaucrats-begin-spreading-fud-about-crowdfunding.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>run-for-your-lives</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20120823/01035920130</wfw:commentRss>
</item>
<item>
<pubDate>Tue, 21 Aug 2012 17:00:00 PDT</pubDate>
<title>DailyDirt: Cheaters Never Prosper?</title>
<dc:creator>Michael Ho</dc:creator>
<link>http://www.techdirt.com/articles/20100923/04515311137/dailydirt-cheaters-never-prosper.shtml</link>
<guid>http://www.techdirt.com/articles/20100923/04515311137/dailydirt-cheaters-never-prosper.shtml</guid>
<description><![CDATA[ It's hard to really know how many cheaters are actually caught taking shortcuts. Generally, people assume that the ones who get caught are representative of all cheaters -- but maybe the smart cheaters are never caught... and really <i>do</i> prosper. Here are just a few known cheaters... and not all of them have faced up to any consequences.

<ul>

<li> <a title="http://www.npr.org/blogs/thetorch/2012/08/10/158590376/gaming-the-games-the-rules-that-got-bent-in-london" href="http://n.pr/Rcp6rM">South African Olympian Cameron van der Burgh set a world record in the men's 100-meter breaststroke (and won a gold medal), but later he admitted to using more dolphin kicks than are officially allowed.</a> He's not the only one doing it, but that doesn't make it right (just like peeing in the pool). [<a href="http://www.npr.org/blogs/thetorch/2012/08/10/158590376/gaming-the-games-the-rules-that-got-bent-in-london">url</a>]</li>

<li> <a title="http://news.bbc.co.uk/2/hi/uk_news/2823407.stm" href="http://bbc.in/OSFWg1">In the UK, Charles Ingram cheated "Who Wants To Be A Millionaire?" with a simple system of having his wife cough at the correct answers.</a> Ingram and his accomplices were found guilty of cheating by a jury, but maybe if they'd used a slightly less obvious audible system... [<a href="http://news.bbc.co.uk/2/hi/uk_news/2823407.stm">url</a>]</li>

<li> <a title="http://www.slate.com/articles/sports/gaming/2012/08/scrabble_cheating_the_real_story_behind_the_stolen_blanks_scandal_at_the_national_scrabble_championship_.html" href="http://slate.me/ON9MNl">The 2012 National Scrabble Championship was marred by a boy caught palming blank tiles.</a> Cheating at Scrabble is considered such a rare event that a fake wunderkind caught red handed made national news. [<a href="http://www.slate.com/articles/sports/gaming/2012/08/scrabble_cheating_the_real_story_behind_the_stolen_blanks_scandal_at_the_national_scrabble_championship_.html">url</a>]</li>

<li> <a title="http://www.slate.com/blogs/future_tense/2012/08/20/coursera_plagiarism_why_would_students_cheat_in_a_free_online_class_that_doesn_t_over_academic_credit_.html" href="http://slate.me/TQyilo">Surprise: students enrolled in online classes with Coursera have been found cheating with dozens of cases of alleged plagiarism.</a> Students don't (currently) earn any real credits from these classes, but that will likely change someday. So when more online classes actually have value, there will be far more than a few dozen cheaters. [<a href="http://www.slate.com/blogs/future_tense/2012/08/20/coursera_plagiarism_why_would_students_cheat_in_a_free_online_class_that_doesn_t_over_academic_credit_.html">url</a>]</li>

</ul>


If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) <a title="http://www.stumbleupon.com/to/stumble/stumblethru:www.techdirt.com" href="http://bit.ly/fagV8c">Techdirt post</a>.<br /><br /><a href="http://www.techdirt.com/articles/20100923/04515311137/dailydirt-cheaters-never-prosper.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20100923/04515311137/dailydirt-cheaters-never-prosper.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20100923/04515311137/dailydirt-cheaters-never-prosper.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>urls-we-dig-up</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20100923/04515311137</wfw:commentRss>
</item>
<item>
<pubDate>Fri, 30 Mar 2012 03:37:18 PDT</pubDate>
<title>Digital Distribution: Exchanging Control For Convenience</title>
<dc:creator>Tim Cushing</dc:creator>
<link>http://www.techdirt.com/articles/20120327/15533818262/digital-distribution-exchanging-control-convenience.shtml</link>
<guid>http://www.techdirt.com/articles/20120327/15533818262/digital-distribution-exchanging-control-convenience.shtml</guid>
<description><![CDATA[ <p>Digital distribution can be a good thing, eliminating shipping, packaging, printing, storage, etc. and allowing instantaneous order fulfillment. Unfortunately, it has its downside, especially when digital products are tied to "walled gardens." The possibility always exists that the product you purchased, for all intents and purposes, never really belongs to you. We've seen it previously with Amazon's decision to <a href="http://www.techdirt.com/articles/20101215/02571612282/another-reminder-that-you-dont-own-your-ebooks-amazon-removing-more-ebooks-you-bought-archives.shtml">suddenly remove purchased e-books</a> from customers' e-readers. <br /><br /> Stuart Campbell at Wings over Sealand has another example of this unfortunate byproduct of digital distribution: the fact that you don't own what you've purchased. This means that at any time, for nearly any reason, <a href="http://wosland.podgamer.com/the-dark-side-of-digital/">the product you paid for can be rendered completely worthless</a>. </p> In the case of iTunes, customers are <i>not</i> entitled to refunds on purchases, with the product in question being treated much in the same fashion as opened software, DVDs, etc. in brick-and-mortar stores. Once you've opened (installed) the product, it's yours forever, no matter how terrible it is.
<blockquote>
<i>"According to the iTunes Store Terms of Sale, all purchases made on the iTunes Store are ineligible for refund. This policy matches Apple's refund policies and provides protection for copyrighted materials."</i>
</blockquote>
In Campbell's case, the product in question isn't actually a <i>bad</i> piece of software, unlike the many clones and scamware inhabiting app markets. By his own account, he purchased and enjoyed the game (<i>Touch Racing Nitro</i>). After he purchased it, the developer (Bravo) went through a series of price adjustments, trying to find a sweet spot, ranging from &pound;1.19 - &pound;4.99. When this failed to make the impact on sales, Bravo offered a few free trial periods before marking it all the way down to 69p, which moved it back into the top 10 for a short time. <br /><br /> It's at this point that things get ugly.
<blockquote>
<i>Last October the game went free again, and stayed that way for four months. Then the sting came along. About a week ago (at time of writing), the game received an "update", which came with just four words of description - "Now Touch Racing Free!" As the game was already free, users could have been forgiven for thinking this wasn't much of a change. But in fact, the app thousands of them had paid up to &pound;5 for had effectively just been stolen.</i> <br /><br /> <i>Two of the game's three racing modes were now locked away behind IAP paywalls, and the entire game was disfigured with ruinous in-game advertising, which required yet another payment to remove.</i>
</blockquote>
Campbell's paid-for software suddenly became indistinguishable from the free version, despite his having anted up for the game months ago. He fired off an email to Bravo, asking the developers to explain their reasoning for removing previously paid for content and asking these same paying customers to pay up again in order to return the game to its previous state. <br /><br /> He received a reply a day later from Ana Hidalgo, Bravo's "Social Media Manager":
<blockquote>
<i>"Hi!</i> <br /><br /> <i>Thanks for contacting us.</i> <br /><br /> <i>I'm really sorry about that. I knew that this could happen. The team had no option but to do that.</i> <br /><br /> <i>We're not trying to make money from people who have already bought the game like you did. It is not an excuse, but only 4% of the 2MM downloads have been paid ones. Unfortunately, Apple doesn't provide with any methods to know when an user has paid or not for an app. We just want to monetize the game from that 96% who are enjoying the game for free. Our goal is to monetize them via advertisement. We understand that this is annoying for the players that have paid for it.</i> <br /><br /> <i>Yes, maybe we could have released a LITE version, but if we release a new free version, we couldn't monetize near 2 MM free downloads we already have. And why we have 96% free downloads? A very bad old decision.. We've begun a new phase at Bravo Games and we definitely need some revenues from those downloads.</i> <br /><br /> <i>At the moment all our efforts are focused in new projects. When we finish those projects, we'll evaluate the possibility of adding new content to previous games like Touch Racing Nitro.</i> <br /><br /> <i>I regret to hear that you never buy another of our apps."</i>
</blockquote>
For all the supposed "entitlement" game fans have attributed to them constantly, nothing quite matches the entitlement "radiating from Sra. Hildalgo." For starters, if a developer feels that making an app free was a "mistake," it only compounds its errors when it starts taking it out on paying customers, especially when those customers number in the thousands.
<blockquote>
<i>If 96% of those were free downloads, that means that a <b>whopping 80,000 people who paid money for Touch Racing have just been screwed</b>. If we assume an arbitrary but reasonable average price of &pound;1.19 (the second-lowest App Store price tier at the time most of the sales were made, though the app has cost at least twice that much for most of its life),<b> that's just short of &pound;100,000 that Bravo have extracted from consumers for what is in effect a "Lite" demo version of the game</b>.</i> <br /><br /> <i>Imagine if the rest of the world worked this way. Imagine you went to Tesco and bought three boxes of Corn Flakes on a "three-for-two" offer, only for a Tesco employee to turn up at your house one day a month later and confiscate not only the "free" box but also the second one that you'd actually paid for. There'd be riots, or at the very least a long court backlog of assault cases and battered workers. Yet apparently, for videogames it's the dynamic economic model of the future.</i>
</blockquote>
Campbell is, unfortunately, right. Digital distribution puts control of purchased products completely in the hands of the developers and the distribution service. There are some game developers who would love nothing more than to go to 100% straight digital distribution, not only for the previously mentioned savings, but to allow them to retain complete control of their products. A fully digital distribution disguises DRM as a facet of the service (constant online connection, some or most content inaccessible offline) and helps eliminate the <a href="http://www.techdirt.com/articles/20110824/01364015649/more-misplaced-hatred-used-games-market.shtml" target="_blank">used game market</a> which seems to rank very slightly below straight-up piracy in their minds. <br /><br /> Whatever pluses there are for the consumer are greatly negated by these factors. Any dispute between the distributor and the developers puts purchased products in the firing line. Should a developer suddenly pull out of the walled garden, customers may find themselves without support or updates for their purchased products, or worse yet, find themselves without functioning products. <br /><br /> Campbell has adjusted his tactics accordingly:
<blockquote>
<i>WoSland is a pretty wily consumer, and currently has eight apps sitting in its iPhone's "update" queue which are never going to get those updates, because the "update" in question is in fact a downgrade, removing functionality and/or adding ads. We've deleted many others altogether for the same reason.</i>
</blockquote>
Of course, this is far from convenient. Once you run into this situation, you're left with the choice of allowing all updates (even those that downgrade your software) or tediously updating all of your apps one at a time after verifying that said update won't remove functionality. Hardly ideal. <br /><br /> As he points out, console owners aren't so lucky. Most updates are forced, giving you the "choice" of updating or not playing your purchased game. And it's not just games and apps. As referenced above, e-books readers have been victims of distributor meddling in the past. Users of "services" like <a href="http://www.techdirt.com/articles/20111021/12064316454/hollywoods-kinder-gentler-drm-ultraviolet-getting-slammed-reviews.shtml">Ultraviolet</a> and the "<a href="http://www.techdirt.com/articles/20120314/01453118097/does-anyone-who-develops-new-products-hollywood-ask-would-i-ever-actually-use-this.shtml">drive your DVD to the retailer to rip it to the cloud</a>" may find their copies bricked if these services are shut down or (more likely) get caught in the middle of a contractual dispute. <br /><br /> If it's all about "control" with gatekeepers and walled gardens, digital distribution is playing right into their hands, turning what should be an advantageous situation for everyone involved into little more than a mixed curse.<p>&nbsp;</p><br /><br /><a href="http://www.techdirt.com/articles/20120327/15533818262/digital-distribution-exchanging-control-convenience.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20120327/15533818262/digital-distribution-exchanging-control-convenience.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20120327/15533818262/digital-distribution-exchanging-control-convenience.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>all-your-digital-purchases-are-belong-to-us</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20120327/15533818262</wfw:commentRss>
</item>
<item>
<pubDate>Thu, 22 Mar 2012 00:14:58 PDT</pubDate>
<title>Scammers Mimic Copyright Troll Shakedowns In Targeting Megaupload Users</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20120321/14220118189/scammers-mimic-copyright-troll-shakedowns-targeting-megaupload-uses.shtml</link>
<guid>http://www.techdirt.com/articles/20120321/14220118189/scammers-mimic-copyright-troll-shakedowns-targeting-megaupload-uses.shtml</guid>
<description><![CDATA[ We've noted in the past the similarities between mass IP infringement trolling lawsuits and shakedown scams -- and have even seen some out-and-out scammers mimic the techniques of copyright trolls.  Torrentfreak now reports that <a href="http://torrentfreak.com/criminals-target-megaupload-users-with-fake-settlement-demands-120321/" target="_blank">some scammers are specifically targeting Megaupload users</a>, pretending to be lawyers demanding payment for infringements on Megaupload.  While these are pure scams, given the MPAA's own statements about <a href="http://www.techdirt.com/articles/20120321/12073218187/mpaa-asks-megaupload-data-to-be-retained-so-it-can-sue-users-then-insists-it-didnt-really-mean-that.shtml">possibly suing</a> Megaupload users, combined with the success rate that copyright trolls often have in getting some people to just pay up, it seems likely that a fair number of recipients of such a scam letter are actually falling for it.<br /><br /><a href="http://www.techdirt.com/articles/20120321/14220118189/scammers-mimic-copyright-troll-shakedowns-targeting-megaupload-uses.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20120321/14220118189/scammers-mimic-copyright-troll-shakedowns-targeting-megaupload-uses.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20120321/14220118189/scammers-mimic-copyright-troll-shakedowns-targeting-megaupload-uses.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>but-of-course</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20120321/14220118189</wfw:commentRss>
</item>
<item>
<pubDate>Fri, 24 Feb 2012 04:16:05 PST</pubDate>
<title>No Honor Among Thieves: Woman Scams Nigerian Scammers Out Of $33k</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20120223/13063417849/no-honor-among-thieves-woman-scams-nigerian-scammers-out-33k.shtml</link>
<guid>http://www.techdirt.com/articles/20120223/13063417849/no-honor-among-thieves-woman-scams-nigerian-scammers-out-33k.shtml</guid>
<description><![CDATA[ With so much focus on Nigerian-based scams, many Nigerian scammers now seek to use middlemen to help with things like bank accounts to keep suspicion levels lower.  There are plenty of stories of people in the US, Europe and elsewhere who take "jobs" that involve having a local bank account through which scam money flows to Nigeria -- where they're allowed to keep a percentage of the cash.  Often, they are not otherwise involved or knowledgeable about the scam.  
<br /><br />
That appears to be the case with one woman in Australia, who has now gotten in trouble... <a href="http://www.couriermail.com.au/news/breaking-news/aussie-woman-scammed-nigerians-court/story-e6freonx-1226279598283" target="_blank">because she scammed the scammers out of $33k</a> while managing the pass through bank account (found via <a href="http://yro.slashdot.org/story/12/02/23/1921200/nigerian-scam-artists-taken-for-33000?utm_source=slashdot&#038;utm_medium=twitter" target="_blank">Slashdot</a>).  She apparently had no idea of the scam that was going on (involving bogus online used car sales), but decided to keep some extra amounts of money.  Of course, when some of those scammed in the car deal sought to track down the scammers... the focus shifted to her, where her own thievery from the thieves was discovered.
<br /><br />
The story notes that the woman has now pled guilty to "aggravated fraud," though it's unclear if the fraud was for the original fraud from her "bosses" in the Nigerian scam ring... or for scamming the scammers themselves.  Somehow I doubt they would press charges.<br /><br /><a href="http://www.techdirt.com/articles/20120223/13063417849/no-honor-among-thieves-woman-scams-nigerian-scammers-out-33k.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20120223/13063417849/no-honor-among-thieves-woman-scams-nigerian-scammers-out-33k.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20120223/13063417849/no-honor-among-thieves-woman-scams-nigerian-scammers-out-33k.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>trust-issues</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20120223/13063417849</wfw:commentRss>
</item>
<item>
<pubDate>Wed, 14 Dec 2011 19:44:11 PST</pubDate>
<title>Brazen Scams By Engineers Uncovered</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20111212/03381817041/brazen-scams-engineers-uncovered.shtml</link>
<guid>http://www.techdirt.com/articles/20111212/03381817041/brazen-scams-engineers-uncovered.shtml</guid>
<description><![CDATA[ Two separate stories of two different fairly amazing scams by engineers have come out recently.  The first one is the more incredible one, and it involves a guy named William Grayson Hunter, who apparently secretly <a href="http://www.latimes.com/business/la-fi-aerospace-fraud-20111207,0,6213284.story" target="_blank">had two separate full time jobs at two different companies</a>, but barely spent much time at either, instead "spending his days at bars, amusement parks and movie theaters," but sent in time cards, including some that billed for more than 24-hours a day.  One of his two full-time employers, Aerospace Corp., just agreed to pay the government $2.5 million after it was investigating Hunter's work that was billed to the government at a premium.  Of course, there's no punishment for Hunter, who died in 2010.
<br /><br />
The other story is a bit more conventional.  A network engineer at Verizon Wireless repeatedly used the company's warranty contracts with Cisco to order replacements parts that weren't needed, and then sold them off and kept the money -- which apparently added up to $4.5 million.  Like Hunter above, Michael Baxter had interests outside of work:
<blockquote><i>
[Baxter] spent the proceeds on jewelry, cars, international travel and multiple cosmetic surgeries for his girlfriend, prosecutors said.
</i></blockquote>
Apparently, controls and audits on such things have gone out of style.<br /><br /><a href="http://www.techdirt.com/articles/20111212/03381817041/brazen-scams-engineers-uncovered.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20111212/03381817041/brazen-scams-engineers-uncovered.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20111212/03381817041/brazen-scams-engineers-uncovered.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>nice-work-if-you-can-get-it</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20111212/03381817041</wfw:commentRss>
</item>
<item>
<pubDate>Mon, 14 Nov 2011 12:29:55 PST</pubDate>
<title>UMG Finds Perfect Biz Model: Cheat Artists, Then, If Caught, Demand Insurance Company Pay Instead</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20111113/01050116753/umg-finds-perfect-biz-model-cheat-artists-then-if-caught-demand-insurance-company-pay-instead.shtml</link>
<guid>http://www.techdirt.com/articles/20111113/01050116753/umg-finds-perfect-biz-model-cheat-artists-then-if-caught-demand-insurance-company-pay-instead.shtml</guid>
<description><![CDATA[ The sheer chutzpah of Universal Music is really quite stunning.  As you may recall, in 2009, it came out that the major record labels had been screwing over musicians in Canada with a bit of sleight of hand called <a href="http://www.techdirt.com/articles/20091207/1201017234.shtml">"exploit now, pay later if at all."</a>  The way it worked was that labels would put old works on compilations without getting artists' permission, then put the artists' names on a "pending" list, which was supposed to mean that payment to those artists was "pending."  Except the pending lists were never touched and the royalties were never paid.  Labels not paying artists royalties is a pretty common issue, but here they weren't even getting any credit at all.  Pretty sneaky.  Realizing they had been caught red handed, the labels <a href="http://www.techdirt.com/articles/20110110/14112612596/major-record-labels-agree-to-pay-45-million-copyright-infringement-canada.shtml">"settled"</a> by agreeing to pay the $45 million in royalties owed.
<br /><br />
However, it turns out that Universal Music Group actually seems to think that <i>its insurance company</i> should be paying the $14.4 million it owes (UMG's share of the $45 million).  It's <a href="http://www.hollywoodreporter.com/thr-esq/universal-music-chet-baker-lawsuit-260608" target="_blank">now suing its insurance company for refusing to pay</a>.  If you think about it for a second, you realize just how <i>insane</i> this claim is.  Basically, Universal Music is claiming that it can simply <i>not pay any royalties at all</i>, then wait to get sued... and if it loses and has to pay, it believes <i>its insurance company has to foot the bill</i>.  Now there's a business model!<br /><br /><a href="http://www.techdirt.com/articles/20111113/01050116753/umg-finds-perfect-biz-model-cheat-artists-then-if-caught-demand-insurance-company-pay-instead.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20111113/01050116753/umg-finds-perfect-biz-model-cheat-artists-then-if-caught-demand-insurance-company-pay-instead.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20111113/01050116753/umg-finds-perfect-biz-model-cheat-artists-then-if-caught-demand-insurance-company-pay-instead.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>wow</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20111113/01050116753</wfw:commentRss>
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<pubDate>Tue, 18 Oct 2011 22:26:47 PDT</pubDate>
<title>No Surprise: Scammers Focus On Tricking The French With False Three Strikes Infringement Notices</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20111017/03155116381/no-surprise-scammers-focus-tricking-french-with-false-three-strikes-infringement-notices.shtml</link>
<guid>http://www.techdirt.com/articles/20111017/03155116381/no-surprise-scammers-focus-tricking-french-with-false-three-strikes-infringement-notices.shtml</guid>
<description><![CDATA[ We've seen <a href="http://www.techdirt.com/articles/20100328/2218448753.shtml">similar scams</a> for a few years now, but with the French three strikes administrators, Hadopi, sending out <a href="http://www.techdirt.com/articles/20111004/13463316198/france-continues-mass-processing-infringement-accusations-60-people-get-third-strike-notice-650000-get-first-strike.shtml">650,000</a> first strike notices, it should come as no surprise that the scammers have jumped in to <a href="http://torrentfreak.com/scammers-try-to-trick-cash-from-surprised-file-sharers-111013/?utm_source=feedburner&#038;utm_medium=feed&#038;utm_campaign=Feed%3A+Torrentfreak+%28Torrentfreak%29" target="_blank">try to take advantage of people</a>.  They're sending notices to people pretending to be infringement notices from Hadopi.  They ask people to click through to access their report.  Following the link brings you to a cleverly faked Hadopi website, which asks for a registration code and provides the following instructions:
<blockquote><i>
&ldquo;To get the access code by SMS: Send CODE to 81083. For the confirmation code by SMS: send CODE to 81015. To get the access code by phone: call the following number: 0899 230 141. Confirmation code by phone: call the following number: 0899 230 148.&rdquo;
</i></blockquote>
And that's where the scam part comes in.  The numbers are apparently premium access numbers, meaning that sending those text messages will end up costing quite a bit.  Pretty sneaky.  Yet another example of the kind of collateral damage created when you set up systems that treat people as guilty without any hearing or trial.  It leaves itself wide open for abuse from scammers.<br /><br /><a href="http://www.techdirt.com/articles/20111017/03155116381/no-surprise-scammers-focus-tricking-french-with-false-three-strikes-infringement-notices.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20111017/03155116381/no-surprise-scammers-focus-tricking-french-with-false-three-strikes-infringement-notices.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20111017/03155116381/no-surprise-scammers-focus-tricking-french-with-false-three-strikes-infringement-notices.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>but-of-course</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20111017/03155116381</wfw:commentRss>
</item>
<item>
<pubDate>Fri, 14 Oct 2011 14:11:00 PDT</pubDate>
<title>Wall Street Journal Europe Doles Out Cash And Favors To Inflate Circulation Numbers</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20111013/17581016346/wall-street-journal-europe-doles-out-cash-favors-to-inflate-circulation-numbers.shtml</link>
<guid>http://www.techdirt.com/articles/20111013/17581016346/wall-street-journal-europe-doles-out-cash-favors-to-inflate-circulation-numbers.shtml</guid>
<description><![CDATA[ I can't find it now, but just a few months ago I got into a discussion in our comments with someone who insisted that newspapers or paywalls were always going to be a better place for advertisers because they actually knew who their readers were and could verify and audit that information.  I noted that the newspaper industry has a <i>long history</i> of boosting circulation numbers <a href="http://www.npr.org/templates/story/story.php?storyId=4704566" target="_blank">through fraud</a>.  In response, I was told that doesn't happen any more.  That seemed laughable.  Indeed, reports have now come out that the Wall Street Journal Europe was involved in a <a href="http://www.guardian.co.uk/media/2011/oct/12/wall-street-journal-andrew-langhoff" target="_blank">complicated scam to massively boost its circulation numbers</a> by giving companies cash to buy copies of the paper at greatly discounted rates.  Even worse, it appears that some of the deals involved signed contracts with the WSJ, where they promised positive coverage of one of the organizations that would participate in this scheme:
<blockquote><i>
The Guardian found evidence that the Journal had been channeling money through European companies in order to secretly buy thousands of copies of its own paper at a knock-down rate, misleading readers and advertisers about the Journal's true circulation.
<br /><br />
The bizarre scheme included a formal, written contract in which the Journal persuaded one company to co-operate by agreeing to publish articles that promoted its activities, a move which led some staff to accuse the paper's management of violating journalistic ethics and jeopardising its treasured reputation for editorial quality.
</i></blockquote>
Coming on the heels of the voicemail hacking scandal, this is another black eye for Murdoch's News Corp, but it looks significantly worse, given the generally positive reputation around the Wall Street Journal, when it comes to reporting and editorial ethics.<br /><br /><a href="http://www.techdirt.com/articles/20111013/17581016346/wall-street-journal-europe-doles-out-cash-favors-to-inflate-circulation-numbers.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20111013/17581016346/wall-street-journal-europe-doles-out-cash-favors-to-inflate-circulation-numbers.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20111013/17581016346/wall-street-journal-europe-doles-out-cash-favors-to-inflate-circulation-numbers.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>ouch</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20111013/17581016346</wfw:commentRss>
</item>
<item>
<pubDate>Mon, 4 Apr 2011 19:01:00 PDT</pubDate>
<title>Conde Nast Sent $8 Million To A Scammer After A Single Email</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20110404/12323013772/conde-nast-sent-8-million-to-scammer-after-single-email.shtml</link>
<guid>http://www.techdirt.com/articles/20110404/12323013772/conde-nast-sent-8-million-to-scammer-after-single-email.shtml</guid>
<description><![CDATA[ Apparently it's not that hard to scam a big company out of millions of dollars these days.  You can just send a single email, pretending to be from a vendor of that company.  That's apparently what a guy named Andy Surface discovered when he set up a bank account for an operation he called "Quad Graph," likely designed to be similar to Quad/Graphics, the giant printing company that prints many big name magazines.  He then sent a single email to magazine giant Conde Nast, leading the magazine company to <a href="http://blogs.forbes.com/williampbarrett/2011/04/03/conde-nast-paid-8-million-to-scammer-who-sent-one-email/" target="_blank">send that new account $8 million</a>:
<blockquote><i>
In early November, Conde Nast received an "Electronic Payment Authorization&rdquo; form by email at its offices in ... New York. The form appeared to have been sent by Quad/Graphics. The form requested that Conde Nast direct payments for Quad Graphics to the Quad Graph Account, and provided account information. Conde Nast filled out the form and returned it by facsimile from its offices in ... New York to the facsimile number provided in the form. Following Conde Nast's receipt of the "Electronic Payment Authorization" form, Conde Nast started making payments for Quad/Graphics bills by ACH transfer from a Conde Nast account with JPMorgan Chase Bank in New York to the Quad Graph Account.
</i></blockquote>
The whole thing was discovered when the actual printer noticed that it was no longer getting paid and asked Conde Nast what was up.  Conde Nast went to the feds, who arrested the guy and <i>amazingly</i> discovered that all $8 million was still sitting in the bank account.<br /><br /><a href="http://www.techdirt.com/articles/20110404/12323013772/conde-nast-sent-8-million-to-scammer-after-single-email.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20110404/12323013772/conde-nast-sent-8-million-to-scammer-after-single-email.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20110404/12323013772/conde-nast-sent-8-million-to-scammer-after-single-email.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>financial-controls?</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110404/12323013772</wfw:commentRss>
</item>
<item>
<pubDate>Mon, 28 Mar 2011 15:52:46 PDT</pubDate>
<title>What Does It Take For Mobile Operators To Care About SMS Cramming Scams?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/blog/wireless/articles/20110327/23532113642/what-does-it-take-mobile-operators-to-care-about-sms-cramming-scams.shtml</link>
<guid>http://www.techdirt.com/blog/wireless/articles/20110327/23532113642/what-does-it-take-mobile-operators-to-care-about-sms-cramming-scams.shtml</guid>
<description><![CDATA[ The various mobile operators have been making tons of revenue off of premium "short code" SMS programs.  These are ways to add charges for various things directly to your phone bill.  For example, they've become popular with various charities, so you can support them simply by texting a message to a particular short code.  Of course, in many cases, the mobile operators charge you or take a cut for allowing this.  And, of course, as with anything like this, it's been left open to scammers... and those scammers have moved in.  Just as we saw with <a href="http://www.techdirt.com/articles/20040210/2340201.shtml">phone service cramming</a>, where charges would be added to your landline phone bill, there's been a growing set of operations cramming premium SMS offerings.
<br><Br>
Broadband Reports highlights <a href="http://www.dslreports.com/shownews/113383" target="_blank">the saga of JAWA</a>, a Scottsdale, Arizona-based company that's at the center of allegations of cramming.  The company and a bunch of shells allegedly send text messages to people that say:
<blockquote><i>
"Text back STOP if you don't want to subscribe."
</i></blockquote>
Most people, of course, don't text back because they think it's a scam.  What they don't realize is that even if it's a scam, it's the not replying that lets the telcos start adding fees to your bill.  The big question here: why does any mobile operator allow charges to be put on your phone bill for <i>inaction</i>?
<br><br>
  The blog AZDisruptors (normally about Arizona startups) has been <a href="http://www.azdisruptors.com/blog/2011/3/19/wow-im-victim-of-the-text-messaging-scams.html" target="_blank">calling attention</a> to the company, including putting together this video explaining how the cramming works, how JAWA's CEO Jason Hope is apparently building <i>the largest house in the US</i> (complete with a 3-story night club), and how AT&T pretends (falsely) that it can't do anything about it:
<center>
<iframe title="YouTube video player" width="560" height="349" src="http://www.youtube.com/embed/F9MQAfh-bCE" frameborder="0" allowfullscreen></iframe>
</center>
Oh yeah, Broadband Reports also notes that Hope's former blog, which was all about the Lamborghinis and other luxury cars he was acquiring, has suddenly changed to point to a page about his philanthropic work.
<br><br>
The thing is, JAWA has been doing its thing for quite some time.  After Texas regulators began investigating, Verizon Wireless finally realized it needed to do something and sued.  Amusingly, JAWA's <a href="http://www.azdisruptors.com/blog/2011/3/22/jawas-defense-employees-and-intimidation.html" target="_blanK">defense to the lawsuit</a> appears to be that it employs lots of people and is good for Scottsdale.  However, it also points out that it's made Verizon Wireless tons of money, and even complains that Verizon Wireless seems to be withholding money owed.
<br><br>
While it's nice that Verizon Wireless has filed suit, it appears this only happened after Texas regulators began investigating, and after they made money from JAWA for a period of nearly four years.  AT&T now claims that it's investigating too, but only after AZDisruptors demonstrated company representatives blatantly lying to him about whether or not they make any money from this and whether or not they can stop it.
<br><br>
The big question in all of this really should be why the mobile operators allowed this to happen at all.  Why would they <i>ever</i> allow charges to be added to an account as a result of inaction, rather than through direct acceptance?<br /><br /><a href="http://www.techdirt.com/blog/wireless/articles/20110327/23532113642/what-does-it-take-mobile-operators-to-care-about-sms-cramming-scams.shtml">Permalink</a> | <a href="http://www.techdirt.com/blog/wireless/articles/20110327/23532113642/what-does-it-take-mobile-operators-to-care-about-sms-cramming-scams.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/blog/wireless/articles/20110327/23532113642/what-does-it-take-mobile-operators-to-care-about-sms-cramming-scams.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>scams-pay?</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110327/23532113642</wfw:commentRss>
</item>
<item>
<pubDate>Mon, 7 Mar 2011 21:56:00 PST</pubDate>
<title>Copyright Pre-Settlement Virus A Lucrative Scam</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20110307/04375913384/copyright-pre-settlement-virus-lucrative-scam.shtml</link>
<guid>http://www.techdirt.com/articles/20110307/04375913384/copyright-pre-settlement-virus-lucrative-scam.shtml</guid>
<description><![CDATA[ With all of the highly questionable pre-settlement lawsuits out there demanding cash from people to avoid a lawsuit for copyright infringement, we've heard of a few different scams designed to use the same tactics: accuse someone of copyright infringement and demand cash to avoid a lawsuit... even if the operation demanding cash has nothing to do with the copyright holder.  One recent example of this was a bit of malware that, once installed on a computer, would generate fake infringement warnings from the RIAA/MPAA, demanding cash settlements.  <a href="http://torrentfreak.com/leaked-docs-show-results-of-fake-riaampaa-bittorrent-scam-110305/?utm_source=feedburner&#038;utm_medium=feed&#038;utm_campaign=Feed%3A+Torrentfreak+%28Torrentfreak%29" target="_blank">TorrentFreak</a> points us to a report from Brian Krebs who got his hands on some documents from ChronoPay, the operation that was used to handle the payments in this scam, showing <a href="http://krebsonsecurity.com/2011/03/chronopays-scareware-diaries/" target="_blank">just how lucrative the scam has been</a>.  The documents only cover the past two months, but in that time, 580 people paid up, handing over $283,000 to scammers.  Of course, this is only marginally less legit than the standard shakedown from various lawyers who are working with the copyright holders.  But, the success of these scammers' operations is almost certainly driven in part by the success and press coverage of those lawyers who are sending out those mass pre-settlement letters.  People are hearing about this and thinking any such threat is legitimate, even when it's a pure scam.  Of course, this means you should only expect to start receiving plenty more such scam requests, demanding you pay up to avoid a lawsuit.  Kinda makes you wonder if it will make the "actual" letters sent by copyright holders less effective as people just assume they're scam letters.<br /><br /><a href="http://www.techdirt.com/articles/20110307/04375913384/copyright-pre-settlement-virus-lucrative-scam.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20110307/04375913384/copyright-pre-settlement-virus-lucrative-scam.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20110307/04375913384/copyright-pre-settlement-virus-lucrative-scam.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>scammers-love-a-new-scam</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110307/04375913384</wfw:commentRss>
</item>
<item>
<pubDate>Thu, 3 Feb 2011 08:07:05 PST</pubDate>
<title>Homeland Security Strapping GPS Devices To Indian Students Victimized By Scam</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20110202/04232212925/homeland-security-strapping-gps-devices-to-indian-students-victimized-scam.shtml</link>
<guid>http://www.techdirt.com/articles/20110202/04232212925/homeland-security-strapping-gps-devices-to-indian-students-victimized-scam.shtml</guid>
<description><![CDATA[ Homeland Security and its Immigration and Customs Enforcement (ICE) group sure know how to create "international incidents" left and right.  The latest (as pointed out by <a href="http://idle.slashdot.org/story/11/02/01/1444210/US-Authorities-GPS-Tagging-Duped-Indian-Students?from=twitter" target="_blank">Slashdot</a>) is that as part of the process of reviewing the cases of a bunch of Indian students who were allegedly duped by an operation called "Tri-Valley University" in California, ICE agents have <a href="http://timesofindia.indiatimes.com/world/us/Indian-students-in-US-radio-tagged-angry-govt-says-remove-it/articleshow/7386322.cms" target="_blank">put GPS tagging ankle-bracelets on the students</a> to track their movements.  According to the reports, Tri-Valley was a "sham" that helped foreign nationals gain immigration status in the US.  That certainly sounds like it's broken the law, but to then go and tag the students with GPS monitoring bracelets while ICE sorts this all out seems rather aggressive -- and officials back in India are protesting the way the students are being treated:
<blockquote><i>
But New Delhi is not happy with students being treated like criminals. Expressing "serious concern," a government spokesman said India has conveyed to the US authorities that the students, "most of who are victims themselves, must be treated fairly and reasonably, and that the use of monitors on a group of students, who were detained and later released with monitors in accordance with US laws, is unwarranted and should be removed." 
</i></blockquote>
It's almost as if ICE's goal is to make the US government an even bigger laughingstock for being the stereotypical over aggressive law enforcement cowboys often portrayed in the movies.<br /><br /><a href="http://www.techdirt.com/articles/20110202/04232212925/homeland-security-strapping-gps-devices-to-indian-students-victimized-scam.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20110202/04232212925/homeland-security-strapping-gps-devices-to-indian-students-victimized-scam.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20110202/04232212925/homeland-security-strapping-gps-devices-to-indian-students-victimized-scam.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>welcome-to-america</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110202/04232212925</wfw:commentRss>
</item>
<item>
<pubDate>Mon, 24 Jan 2011 04:50:33 PST</pubDate>
<title>Scammers Move In: Facebook Getting Sketchy</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20110121/22573112775/scammers-move-facebook-getting-sketchy.shtml</link>
<guid>http://www.techdirt.com/articles/20110121/22573112775/scammers-move-facebook-getting-sketchy.shtml</guid>
<description><![CDATA[ While it was definitely interesting to look at the <a href="http://www.techdirt.com/articles/20110114/16303012675/how-facebook-used-white-space-to-crush-myspace.shtml">reasons why</a> Facebook was able to crush MySpace in the social networking world, it's also true that there are more and more questions about the sustainability of Facebook.  We recently wrote about the claims of a potential toolbar scammer being one of Facebook's <a href="http://www.techdirt.com/articles/20110118/02531712708/facebooks-3rd-biggest-advertiser-accused-being-affiliate-toolbar-scam-facebook-says-its-never-heard-company.shtml">top advertisers</a>, and while Facebook denies the company has ever advertised with them, others claim they're still seeing those very ads.  Either way, a new research report suggests that <a href="http://gawker.com/5740049/is-facebook-turning-into-a-scammers-paradise" target="_blank">scammers are increasingly targeting Facebook -- with some level of success</a>.  It appears this may quickly become Facebook's next big challenge.  Historically, Facebook was more immune from scams and spam due to its private nature.  However, as the company has continually pulled back on privacy and pushed people to open up more, it's also allowed in all sorts of openings for spam and scams.<br /><br /><a href="http://www.techdirt.com/articles/20110121/22573112775/scammers-move-facebook-getting-sketchy.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20110121/22573112775/scammers-move-facebook-getting-sketchy.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20110121/22573112775/scammers-move-facebook-getting-sketchy.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>movin'-on</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110121/22573112775</wfw:commentRss>
</item>
<item>
<pubDate>Fri, 7 Jan 2011 06:13:04 PST</pubDate>
<title>Is Figuring Out A Slot Machine Software Glitch &#038; Making Money From It A Crime?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20110106/15343412554/is-figuring-out-slot-machine-software-glitch-making-money-it-crime.shtml</link>
<guid>http://www.techdirt.com/articles/20110106/15343412554/is-figuring-out-slot-machine-software-glitch-making-money-it-crime.shtml</guid>
<description><![CDATA[ Over the last few years, casinos around the globe have been <a href="http://www.techdirt.com/articles/20030429/0110209.shtml">using increasingly high tech slot machines</a>, but with high tech slot machines come the usual bugs.  And that raises some interesting legal questions.  In the past, we've <a href="http://www.techdirt.com/articles/20070125/000836.shtml">noted</a> numerous <a href="http://www.techdirt.com/articles/20060705/1154242.shtml">examples</a> of casinos <a href="http://www.techdirt.com/articles/20071026/022323.shtml">blaming</a> software glitches for slot machine awards, and refusing to pay them out.  And, usually, they're being allowed to do this.  That seems a little troubling, but it can get a bit more complex, as in one case a few years ago, where a guy used a slot machine that had faulty software -- and <a href="http://www.techdirt.com/articles/20070722/222657.shtml">was arrested for doing so</a>.  Each time he put in $1, it was credited as $10.  Now, once he realizes this is happening, perhaps you can consider that fraud, but it does seem a bit dangerous to blame the guy for what was really a software glitch by the casino or slot machine vendor.
<br /><br />
The latest such case, found via <a href="http://yro.slashdot.org/story/11/01/06/2246234/Man-Arrested-For-Exploiting-Error-In-Slot-Machines?from=twitter" target="_blank">Slashdot</a>, might not be quite as troubling.  In this case, a guy more or less figured out a software glitch in a variety of slot machines that would enable a series of button presses that would lead to larger awards, and then he used that <a href="http://www.post-gazette.com/pg/11004/1115414-58.stm" target="_blank">to win a lot of money</a>.  Now, I can definitely see the case for fraud here (and the guy has now been arrested).  He didn't just spot a machine with a glitch, but he then actively exploited that glitch, knowing it was a glitch, and took steps to enable that glitch on various machines (to make it work, he apparently had to have casino staff change some settings on the machines, which they would do since he was a "high roller.")
<br /><br />
Given that he was knowingly abusing this glitch, the fraud claims seem much more reasonable.  However, there is still something worrying about charging someone for a crime for doing what a computer system allows them to do.  He didn't technically hack the system -- he just figured out a bug in the software and used that to his advantage.  There is at least <i>some</i> gray area, concerning whether or not some of the liability should fall back on the maker of the slot machine for leaving such a glitch in their software.<br /><br /><a href="http://www.techdirt.com/articles/20110106/15343412554/is-figuring-out-slot-machine-software-glitch-making-money-it-crime.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20110106/15343412554/is-figuring-out-slot-machine-software-glitch-making-money-it-crime.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20110106/15343412554/is-figuring-out-slot-machine-software-glitch-making-money-it-crime.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>apparently</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110106/15343412554</wfw:commentRss>
</item>
<item>
<pubDate>Wed, 5 Jan 2011 05:15:29 PST</pubDate>
<title>Company That Makes Wristbands With Holograms Forced To Admit That Their Scientific Claims Are Bunk</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20110104/00534712504/company-that-makes-wristbands-with-holograms-forced-to-admit-that-their-scientific-claims-are-bunk.shtml</link>
<guid>http://www.techdirt.com/articles/20110104/00534712504/company-that-makes-wristbands-with-holograms-forced-to-admit-that-their-scientific-claims-are-bunk.shtml</guid>
<description><![CDATA[ If you've seen those hologram-adorned wristbands advertised that are supposed to give you "balance" or some other such nonsense, you probably were smart enough to know that they were the modern equivalent of snake oil.  However, for the gullible folks who believed in the claims of the manufacturer, Australian officials have forced the company to <a href="http://gizmodo.com/5723577/" target="_blank">admit publicly that there's no scientific basis for their claims</a> about the properties of the wristbands, and that the company "engaged in misleading conduct."  What amazes me is that anyone believes the claims in the first place.  The idea that a bracelet with a hologram improves your balance, enhances muscle response and increases stamina and flexibility just seems so obviously ridiculous.  Even if you believed it might work via a <a href="http://www.techdirt.com/articles/20101226/17292212411/study-suggests-placebos-dont-have-to-be-secret-to-work.shtml">sort of placebo effect</a>, you'd have been better off believing in the magic powers of a basic rubberband and wearing that on your wrist.  Nice to see regulators (in Australia, at least) forcing the company to admit that its product claims were based on nothing but a desire to sell cheap bracelets at a tremendous markup.<br /><br /><a href="http://www.techdirt.com/articles/20110104/00534712504/company-that-makes-wristbands-with-holograms-forced-to-admit-that-their-scientific-claims-are-bunk.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20110104/00534712504/company-that-makes-wristbands-with-holograms-forced-to-admit-that-their-scientific-claims-are-bunk.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20110104/00534712504/company-that-makes-wristbands-with-holograms-forced-to-admit-that-their-scientific-claims-are-bunk.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>truth-in-advertising</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20110104/00534712504</wfw:commentRss>
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<pubDate>Tue, 28 Dec 2010 04:25:57 PST</pubDate>
<title>Shouldn't We Fix The Check Clearing Loophole That So Many Scammers Abuse?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20101226/23370012415/shouldnt-we-fix-check-clearing-loophole-that-so-many-scammers-abuse.shtml</link>
<guid>http://www.techdirt.com/articles/20101226/23370012415/shouldnt-we-fix-check-clearing-loophole-that-so-many-scammers-abuse.shtml</guid>
<description><![CDATA[ <a href="http://idle.slashdot.org/story/10/12/19/2358235/Nigerian-Email-Scam-Victim-Sues-Bank-Loses-Appeal?from=twitter" target="_blank">Slashdot</a> points us to a recent story about a guy who <a href="http://www.rhlaw.com/blog/californialitigationattorney/nigerian-scam-victim-sues-bank-loses-in-california-appellate-court-in-riverside/" target="_blank">lost his lawsuit against a bank</a>, over a variation on a classic Nigerian email scam.  The scam is one we've discussed many times in the past: somehow the victim gets a big check, which they're expected to deposit in a bank.  After the check "clears," the victim/recipient is supposed to transfer a large chunk of that money to the scammer, on the belief that they get to keep whatever is left over.  What really happens is a few days <i>after</i> the check "clears," the bank finds out it's fraudulent, and tries to void the transaction.  But, by then, the victim has already transferred out a big chunk of money (and the scammer has already taken all that cash out of the bank and disappeared) -- leaving the victim footing the bill, with the bank expecting them to come up with the missing cash.  In this case, the scam took on all the familiar facets of this scam:
<blockquote><i>
In March 2009, Brian Peters received an email from someone purporting to be a citizen of Malaysia. The e-mail informed Peters that certain third parties in the United States and Canada owed the purported Malaysian money, but that "they can not transfer the funds to any bank account outside America continent due to their new company policy [sic]." He asked Peters to "assist me in receiving the funds and forward to me." He offered to pay Peters 12 percent of the money. Peters agreed after apparently negotiating an increase of his fee to 15 percent.
<br /><br />
Peters deposited the $808,988.90 in checks received from the purported Malaysian at Chino Commercial Bank. After the bank notified Peters that the checks had cleared, Peters wire transferred $468,000 to Hong Kong. Shortly thereafter, the checks were dishonored after the bank detected that they had been altered. Since Peters was personally liable for any overdrafts on the account, which had only a few thousand dollars, the bank sought to attach property owned by Peters to collect on the overdraft. The trial court granted the bank&rsquo;s motion to attach against Peters in the amount of $458,782.60.
</i></blockquote>
This certainly isn't the first such lawsuit.  We wrote about a <a href="http://www.techdirt.com/articles/20090127/0159093545.shtml">similar case</a> two years ago, which involved some scammers tricking a law firm (who really should have known better).  The reason this scam works over and over and over again is pretty simple: most people have no idea that when a check "clears," it's not actually been validated.  This is apparently due to various laws that require banks to make money from checks available within a very short period of time.  So the way banks deal with this is to just make the money available, and if they later find out that the check was fraudulent, they pull back the money.  But, of course, most people don't know this and assume (somewhat reasonably) that if a check "clears" and the money is listed as "available," the bank has made sure the check is legitimate.  This is a somewhat unintended consequence of laws to make paying by check work better, but it leads to a huge opening for these types of scams.
<br /><br />
So if they need to do that, shouldn't it make sense for banks to at least put forth pretty clear warnings on money that has not <i>really</i> been validated yet?  Or to at least proactively warn anyone seeking to withdraw money that hasn't really been validated that if the check fails to validate, they may be liable?  It seems like there must be better ways to deal with this kind of scam than to just let the scammers keep taking advantage of this knowledge gap.<br /><br /><a href="http://www.techdirt.com/articles/20101226/23370012415/shouldnt-we-fix-check-clearing-loophole-that-so-many-scammers-abuse.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20101226/23370012415/shouldnt-we-fix-check-clearing-loophole-that-so-many-scammers-abuse.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20101226/23370012415/shouldnt-we-fix-check-clearing-loophole-that-so-many-scammers-abuse.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>simple-questions</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20101226/23370012415</wfw:commentRss>
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<pubDate>Thu, 23 Dec 2010 09:23:00 PST</pubDate>
<title>Journalists Don't Do Math: How Does Buying 6,000 Songs With Stolen Credit Cards Get You &#163;500,000 In Royalties?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20101222/23182312392/journalists-dont-do-math-how-does-buying-6000-songs-with-stolen-credit-cards-get-you-500000-royalties.shtml</link>
<guid>http://www.techdirt.com/articles/20101222/23182312392/journalists-dont-do-math-how-does-buying-6000-songs-with-stolen-credit-cards-get-you-500000-royalties.shtml</guid>
<description><![CDATA[ <a href="https://twitter.com/#!/Shocklee/statuses/17636748569870336" target="_blank">Shocklee</a> points us to a story claiming that a group of teenagers in the UK uploaded some of their own songs to iTunes, then <a href="http://thenextweb.com/uk/2010/12/22/teen-buys-his-own-songs-2000-times-with-stolen-credit-cards-reaps-500000-royalties/" target="_blank">used a bunch of stolen credit cards to download the songs thousands of times</a>, and then collected approximately $773,000 in royalties.  The article notes that this would be "an easy enough crime to commit," but something in the reporting on this story doesn't make much sense at all.
<br><br>
First off, something appears to be <i>way off</i> in the numbers.  The reports claim that the teens downloaded their own songs approximately 6,000 times over the course of a year and a half.  Yet, they claim they made $773,000 (&pound;500,000) in royalties?  I know that Apple now allows slightly higher prices on some songs, but they're not <i>that high</i>.  The math doesn't add up at all.  iTunes songs in the UK cost &pound;0.79 per song, so 6,000 songs would mean &pound;4,740 spent in total.  Take Apple's (approximated) 30% cut, and you're left with &pound;3,318 -- a far cry from &pound;500,000.  Even if you assume these songs got the "premium" pricing of &pound;0.99, we're still orders of magnitude off (hat tips to Dave W & Stephen for UK iTunes pricing info).  I've gone through the news reports -- and a whole variety of press reports and blogs all report the story exactly the same way: 6,000 total downloads (2,000 by this one guy, Lamar Johnson, who pled guilty to the crime) but not one report that I've found which seems to question the math.
<br><br>
I guess it's entirely possible that buying a bunch of songs yourself would boost the songs onto some lists, that would drive additional "real" sales, but if that were the case, that would be a much more interesting story -- and you would think that the press would point that out.  We've certainly heard claims of "real" music releases where labels have dumped money into getting people to "buy" thousands of copies of songs to try to push a song into a hit list but none of the news on this story suggests that's the case.
<br><br>
Separately, despite the claim of the original article that this is a crime, I fail to see how that's the case at all.  It's clearly an attempt to launder money via iTunes, but there seem to be multiple serious problems with it.  First, as soon as the stolen cards are discovered and the false charges are made clear, it has to be incredibly easy to track down the likely suspect: whoever uploaded the music.  On top of that, given iTunes' 30% or so cut, it seems like a somewhat costly way to launder money... in a way that is incredibly traceable, so the money isn't even that well laundered.<br /><br /><a href="http://www.techdirt.com/articles/20101222/23182312392/journalists-dont-do-math-how-does-buying-6000-songs-with-stolen-credit-cards-get-you-500000-royalties.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20101222/23182312392/journalists-dont-do-math-how-does-buying-6000-songs-with-stolen-credit-cards-get-you-500000-royalties.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20101222/23182312392/journalists-dont-do-math-how-does-buying-6000-songs-with-stolen-credit-cards-get-you-500000-royalties.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>doing-the-math</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20101222/23182312392</wfw:commentRss>
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<pubDate>Wed, 10 Nov 2010 12:12:00 PST</pubDate>
<title>Computer Techs Turn Normal Virus Removal Into Multi-Million Dollar Scam</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20101110/01222611790/computer-techs-turn-normal-virus-removal-into-multi-million-dollar-scam.shtml</link>
<guid>http://www.techdirt.com/articles/20101110/01222611790/computer-techs-turn-normal-virus-removal-into-multi-million-dollar-scam.shtml</guid>
<description><![CDATA[ Lots of people suspect that the various companies out there who promise to clean viruses off your computer are a bit of a scam -- and, apparently, in at least one case, it turned out to be a huge scam.  Apparently a guy working for one of those companies, Vickram Bedi, realized that Roger Davidson, who brought in his laptop to have it cleaned of a virus, was a wealthy composer (and heir to a fortune).  So, rather than clean up the virus, Bedi and his girlfriend, Helga Invarsdottir, worked out <a href="http://online.wsj.com/article/SB10001424052748703957804575602993406810012.html?mod=googlenews_wsj" target="_blank">a scam that bilked Davidson of somewhere between $6 and $20 million</a>.
<blockquote><i>
When asked to remove the virus from the laptop, Mr. Bedi allegedly told Mr. Davidson that his computer had in fact been attacked with a virus so virulent that it also damaged Datalink's computers, according to prosecutors.
<br><br>
Mr. Bedi told Mr. Davidson that he had tracked the source of the virus to a remote village in Honduras and that Mr. Bedi's uncle, purportedly an officer in the Indian military, had traveled there in a military aircraft and retrieved the suspicious hard drive, prosecutors said.
<br><br>
In addition, Mr. Bedi told the victim that his uncle had uncovered an assassination plot against Mr. Davidson by Polish priests tied to Opus Dei, according to prosecutors....
<br><br>
In addition to the thousands of dollars charged to secure Mr. Davidson's computer, Mr. Bedi and Ms. Invarsdottir allegedly charged thousands more to provide 24-hour covert protection for Mr. Davidson and his family.
<br><br>
Harrison Police Chief Anthony Marraccini said the couple charged Mr. Davidson about $160,000 every month for bogus security and other services. At the time of their arrest, Ms. Invarsdottir had $1.6 million in a bank account and Mr. Bedi had $6 million in a separate account, Mr. Marraccini said. Those accounts have been frozen and computers and business documents were seized by police, Mr. Marraccini said.
</i></blockquote>
According to the article, this scam only came to light after law enforcement was investigating Bedi and Invarsdottir for <i>another</i> scam, suggesting that this may have been an even bigger scam, with more targets.<br /><br /><a href="http://www.techdirt.com/articles/20101110/01222611790/computer-techs-turn-normal-virus-removal-into-multi-million-dollar-scam.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20101110/01222611790/computer-techs-turn-normal-virus-removal-into-multi-million-dollar-scam.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20101110/01222611790/computer-techs-turn-normal-virus-removal-into-multi-million-dollar-scam.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>opus-dei-has-infected-your-computer</slash:department>
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