July saw a run of bad economic luck for Second Life residents. The Ginko "bank" allegedly defrauded its customers and the World Stock Exchange was allegedly hacked. Now the MIT Technology Review has taken a look at the economic woes of fleecing virtual residents. Most of the interviewed experts, like IBM's Sandy Kearney and Linden's own Gene Yoon, write the problems off as indicative of the early stage of virtual worlds. They compare the problem to the state of the Internet in 1994, arguing that individuals should beware of potentially fraudulent offers and take responsibility for themselves. David Naylor, a partner in the U.K. law firm of Field Fisher Waterhouse, disagrees: "A lot of the legislation over the last 10 years relating to online commercial [transactions] has all been about governments trying to create a level playing field where trust between buyers and sellers is created. An environment where it is easy and simple to defraud others, with them not having much of a comeback, if any, is not one which is going to lend itself well to significant business development."
"It's not the only factor," Naylor continues, "but it is a significant factor in the commercial attractiveness and viability of these environments. If you destroy the trust between a buyer and a seller--which is a fairly tenuous thing to establish in the online environment in the first place, where people lack face-to-face communication--you can quickly and massively impact people's willingness to transact with each other."
Linden Lab has tackled the problem on its own, though too late to be covered by MIT. Yesterday it issued its own cautionary statement, offering users a list of tips to help determine whether an offer was valid or fraudulent and potentially a result of phished credit cards. However, even if the Linden dollars are purchased in good faith, the Lab holds the buyer responsible.
"You therefore purchase these third party L$ at your own risk: if they are discovered to be fraudulent — in effect phony — we will recoup them from your account," wrote JP Linden. "We must do so, in order to avoid tacitly (and financially) encouraging a practice that harms Second Life sellers, phishing victims, and Linden Lab itself."
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