Linden Crime Alert

by Jessica Holyoke on 03/01/08 at 8:54 am

Lab to punish unknowing recipients of fraudulent L$s

by Jessica Holyoke

crime – and punishment?

Wednesday on the Second Life Blog, JP Linden advises caution when dealing with third party resellers of Lindens dollars.  JP Linden’s concern is that some third parties buy their Linden dollars from stolen credit cards, phished accounts or hijacked PayPal accounts.  JP then goes on about how to best spot fraudulent resellers, fly by night operations with no background, and warns against patronizing those who resort to spam advertisements to sell Lindens, as you would in World of Warcraft . There are further warnings against being forced to wait for receipt of L$s or receiving the Lindens from multiple accounts.  However, its what happens to the unknowing purchaser that is the scary part.

JP Linden reminds us that if a resident purchases fraudulent Linden dollars, then the buyer is liable for up to 150% of the original purchase.  So that if you buy L$1000, Linden Lab can seize from you L$1500.  The stated reason for this policy is that Linden Lab cannot encourage this activity.  So instead of having stricter paypal or credit card controls, they will seize Lindens that are, in their view, fraudulent.

Here’s an example of why this is problematic:

Carl Reseller uses John Doe’s credit card to buy Linden dollars from the LindeX.  Then Carl Reseller sells the Lindens to Stacey Victim.  John Doe then reports his card as stolen and the credit card company takes the money back from the Lindens.  Now the Lindens need to recover their losses.  Instead of, presumably, applying to their insurance carrier or writing off the loss, they turn to their customer, Stacey Victim.  They can recover up to 150% of the purchase and then blame her for buying from someone she shouldn’t have. 

This is not the first time this has come up.  Over the summer, a number of residents were banned from the Grid because they purchased Lindens from eBay.  The reason given from Robin Linden was that the residents bought fraudulent Lindens.  So banning is another possible sanction if you find yourself a victim of fraud.

JP Linden did mention that Linden Lab was working with various international law enforcement agencies and credit card companies.  But Linden Lab to date has not reported a single prosecution or arrest of anyone who ever committed fraud on the Grid.

21 Responses to “Linden Crime Alert”

  1. Astonished Reader

    Jan 3rd, 2008

    LL sucks!

  2. chmarr walcott

    Jan 3rd, 2008

    wow really 150%.BULLSHIT with a capital BULLSHIT

    In September 2006 there was a security problem at linden labs in which someone managed to hack into the account servers and some 80,000 account details which included real life names , addresses , credit card numbers , phone numbers and even the answers to the security questions which at the time were in place were all stolen.
    Approximately 3 weeks later linden labs announced there was a “minor” security breach and suggested everyone change their passwords, 1 week later they made everyone change their passwords but in the end it took from September to the end of October to tell everyone what had really happened.
    Throughout November I was hearing horror stories about people seeing there inventory vanishing and their money vanishing from their accounts and people sending in requests for credit card queries from linden labs and there credit card companies, the requests from linden labs were ignored yet there credit card companies promptly halted all payments on there credit cards also those people also contacted PayPal and PayPal froze there accounts until it was cleared, the following 4 weeks went quiet as the hacker stories died down to become another whisper in the wind until…….

    December 10th and it all went to shit, nexus ambassador was approached by a possible sponsor, after a rigorous checkup by linden labs AND nexus and several other people nexus accepted his proposal and with linden labs blessing he took the sponsor money which was in L$ which was roughly in the 8 digit region.
    After the money was transferred everyone was happy and joyful that furnation had a very nice and generous sponsor, now at the same time I was a DJ for All Fur Radio and at the time I was a very popular DJ at the time, during my time as a dj I did many parties within and outside furnation because I always did “surprise” partys at various locations and I gave away various prizes I also at the time had a “sploder” ball, for those that don’t know what a sploder ball is what is commonly known as an “exploder lottery ball” meaning people deposit money into the ball over a certain length of time when the time runs out all the money that was in it is then tossed back to the people that entered it but the amounts varied.

    Well I was holding an xmas party on December 18th which was a big one as I was attempting to hold the biggest party in furnation, at 8pm UK time I had 150 people listening on the stream I had 80 people in furnation gamma, 40 in furnation vista and 20 in furnation alpha. The sploder balls were also placed in these Sims as well as one in furnation aqua and 1 in furnation prime.

    2 hours later I had maxed the shout cast stream at 200 the sploder balls were going nuts, people were tossing silly money into them ranging from 10$L up to 10,000$L, it was insanity.

    At aprox midnight uk time I was using THREE shout cast streams I had nearly 600 people listening to me dj as I jumped from each of the furnation Sims to let people see me in person so I could personally give the prizes away. At the time I was giving avatars, cars, clothes and various other items away from known stores such as bare rosé, cobalt cars, luskwood, lost creatures and various other stores.

    At 1am uk time the whole thing went to hell in a hand basket, in furnation gamma was where I had the most people dancing and enjoying the party when news was filtered through that some of the admins had there accounts locked down for unknown reasons, as I received the news I looked at the sploder as it was sitting at 29,000$L the countdown timer was at 20 seconds when someone dropped $L600,000 then 5 seconds after that I received a further 600,000.

    The moment that was dropped into my account I was kicked off the grid, I tried to log back in but failed then I tried again only to receive a pop-up saying my account was frozen until further notice.
    From December 18th to January 8th my account was locked down as on the 8th I received the following email.

    Sent: 08 January 2007 19:13:32
    Subject: chmarr Walcott

    Hi, We have released your account, chmarr Walcott. At the time of release it was assessed L$1,873,000. This is the amount that your account was given to you by a party who obtained them by fraudulent means. Regards, Jill Linden

    The following emails were the conversation I had with Jill linden
    What is strange is the dates of the payments which I still never received an explanation on
    Re: chmarr Walcott?
    From: Jill Linden (
    Sent: 09 January 2007 22:03:03
    To: Chmarr Walcott (

    Chmarr Walcott wrote:
    >hi there
    > Jill this is the FIRST time i have heard about this fraud when my
    > account was locked down i received NO information as to why and how it
    > was closed until now as for the so called L$1,873,000 i NEVER received
    > that… the only time i received that much money was when i was running > a “sploder” its like a lottery machine everyone throws money into it
    > and after about 5-10 mins the sploder “explodes” and it shares the
    > total pot of money between the ppl that entered it the only downside
    > the sploder does not keep a record of the names of the ppl but as you
    > may have already checked my account does which i just checked and the
    > dates 20/12/2005 – 21/12/2006 are missing and that can only be done
    > on the lindinlab side but as for me and a few other being told to pay
    > back the amount that was put into the sploder even though i have no
    > control over it why should i pay for someone else’s action as i cant
    > afford the real dollar value behind that and i know that you have the
    > person who made the transaction under investigation which means i am
    > being forced to pay money back on something i did not do>

    Here is the information on the two main transactions.
    Payment 600,000 2006-12-23 14:13:57 to chmarr Walcott
    Payment 1,200,000 2006-12-23 16:15:16 to chmarr Walcott
    These L$ were obtained by fraudulent means and gifted to your account. Your request to process the credit from the proceeds of sale of a portion of these ill gained funds (L$302,000) was declined. We note that this account is in final status. If the account is abandoned, subsequent accounts will be held for fraud.

    Regards, Jill Linden

    Re: chmarr Walcott?
    From: Jill Linden (
    Sent: 10 January 2007 15:36:46
    To: Chmarr Walcott (

    Chmarr Walcott wrote:>>
    but i did not know they were stolen and the “gifts” were put into a
    > sploder ..meaning it was put into a lottery style machine and even though
    > it was my sploder but it randomly spits the money out to who ever
    > enters it and the transaction account history DOES say “fair sploder”
    > so i am being accused of fraud even though i did not know the money being
    > put into my sploder was stolen

    Chmarr, We did not imply that you committed fraud. What was stated was you were in receipt of funds that were obtained fraudulently. As a real world example, if someone were to steal something and give it away, the recipient would have no legal claims to it. It’s stolen goods and would be recovered.


    My account was locked down from December 18th and from the replies I received linden labs had activated my account so they could look at the transaction history meaning the lindens have full access to my account and they have the ability to change the details and also look at my personal details even down to my credit card information which I have negated to put into this letter due to it being sent to me via email.
    Since January 2007 I have sent email after email, phone call after phone call and no-one was wanting to talk to me or explain to me what was going on,………….UNTILL august 2007 I had the most violent phone call with a lindenlab employee,

    When my call was answered he was very nice and polite as I explained my situation……then he asked for some details.

    I gave him my in world name,…..the mood changed within 5 seconds when all I heard was “oh? Please wait a moment sir”…this person was really nice to me and did try to help.
    When he came back on the phone he explained that they did find the person who was the one that hacked the servers and gave aprox 200 MILLION $L away but because that person them promptly deleated his account I would be the one to blame.
    Now credit is given to the guy that told me all this but that was just the start, the next fone call I did I was given the worst ever treatment below is what happened

    ~phone rings~
    LL service) – “what do you want”
    ME) – “uuh hi I’m phoning about my account”
    LL service) – “what’s yer name”
    ME) – “chmarr Walcott”
    LL service) – “ok” ~tapping in the background~
    LL service) – “oh its you…do me a favor fuck off I don’t want you in second life”
    ME) – “excuse me but what’s your name and why don’t you want me in second life”
    LL service) – “because yer a fucking hacker and a fucking thief, you were blamed by over 60 people from December about stealing so I will say again fuck off or I’ll ban you from the grid you cunt”
    LL service) – ~phone goes dead~
    ME) – “what the fuck”

    So its now down to this.
    As of today November 28th 2007 I am STILL minus 1,512,020L$. and from what I gathered after that phonecall there was an apparent agreement with most of the people affected what had happened that I was to take the blame and there money would be returned to the amount of the date of the account freeze.
    Nexus ambassador lost APROX $16,000 USD because of LL which was returned to him in full which even he was surprised as all the info he ever got was a phone call from linden labs saying that his account was mistakenly frozen and his money returned.

    About 30 other people had there accounts restored to there pre December 18th state where as mine wasent.
    I am always asked “why don’t you just make a new one up”
    Its simple .i aint leaving the $1041 I have sitting in my account be lost I worked damn hard for that and I refuse to let anyone take that and I refuse to be bullied into leaving LL…its my money and I want it back and I have put up with enough shit so I refuse to let LL be the fucking BIG BROTHER
    So this letter can be put anywhere on the net as you all have my full permission to post this as long as it is NOT ALTERED.

    Thanks for reading Chmarr Walcott

  3. Anonymous

    Jan 3rd, 2008

    Hahaha, if this didn’t make people realize that LL is one giant ponzi scheme lollercoaster.

  4. Anonymous

    Jan 3rd, 2008

    Hahaha, if this didn’t make people realize that LL is one giant ponzi scheme lollercoaster, nothing will. Keep living in your imaginary Candyland.

  5. Callysta Catteneo

    Jan 3rd, 2008

    This comes about 6 months too late. They will ban you and then fine you when you come back online. Anyone you paid the “fraud” lindens to may also be banned and/or fined. Seems to me it’s in LL’s best interest because they get the money back in 3 or 4 ways.

  6. janeforyou Barbara

    Jan 3rd, 2008

    1.How can a victim know 100% that the L$ thay get are fraud?
    2.How many millions of L$ spinning round in SL that are fraud and are used to buye whole islands?
    3.If i sell land how can i know if the buyer use fraud L$, there are no watermarks on L$ in SL

    The answer to all 3 questions are the victim cant know, but still there accounts gets frozen and drained for whats left and thay risk perm ban, is that justice? No its not and it may be illigal cuz we are dealing with innocent victims of crime.

  7. DaveOner

    Jan 3rd, 2008

    You don’t get reimbursed for counterfeit money you receive IRL, either. If it gets caught when you use it the money gets handed over to the Feds, they investigate and you’ll never see your one million dollar bill again!

    And any insurance company that covers loss of space bucks is probably fly-by-night themselves!

  8. Spankubux

    Jan 3rd, 2008

    So don’t buy from third party vendors then, or buy from users you trust.

    Don’t be stupid, don’t run risks.

  9. DaveOner

    Jan 3rd, 2008

    1.How can a victim know 100% that the L$ thay get are fraud?

    You can be pretty sure Lindex is safe. Use common sense and you should be alright.

  10. JimBean

    Jan 3rd, 2008





    god i hate you people.

  11. JustMe

    Jan 3rd, 2008

    Bottom line : if you accept fraudulent or stolen items and they are taken by the authorities, it’s your tough luck, in RL or SL.

    For example, if you take a $100 bill to a bank and ask for 5 $20 bills and the bank tells sees it’s a phony bill, they take it and turn it over to the Secret Service. At that point, you are out the $100 AND you are under suspicion of counterfeiting.

    If someone gives you a check , you cash it at your bank and the check bounces, the bank takes the money back from YOUR account. It’s up to you to get the money back from the person who gave you the check. And, you might be under suspicion of writing a bad check.

    If a store accepts a stolen credit card and doesn’t get the transaction properly approved, the credit card company which paid the store for the transaction takes the money back from the store. The store is out the money.

    That’s how it works, RL or SL .. no difference.

  12. Alyx Stoklitsky

    Jan 3rd, 2008

    So basically, for a small USD fee, I can throw $100,000 lindens at someone, claim they stole it, and get them banned?


  13. Archie Lukas

    Jan 3rd, 2008

    Whilst it seems good and sensible advice

    it also nicely knocks out ALL the competition and gives them a monopoly over the Linden currency and allows some
    unchallenged manipulation, as per real life when the currency stops trading with foreign markets.

    Just a thought

  14. Nacon

    Jan 3rd, 2008


    Well sounds like you would say the person should able to keep the item even if it’s was stolen to be fair because you brought it?

    Let’s just say I stole your vehicle and sold it to some random guy… Would you still want your vehicle back? See how you thought might be fair? No really… think about it.
    (in other words… get over it.)

  15. JP Is ESC's Pawn

    Jan 3rd, 2008

    JP acts like a good guy, but the fact is that he’s the main culprit in denying many financial institutions from receiving RiskAPI capabilities and code so that banks can protect their deposits and depositors from such fraudulent deposits. RiskAPI should be open to anybody opening a bank or exchange, but JP is in the pocket of Electric Sheep and is keeping people from receiving RiskAPI who are legitimate business people.

  16. DaveOner

    Jan 3rd, 2008

    “it also nicely knocks out ALL the competition and gives them a monopoly over the Linden currency and allows some
    unchallenged manipulation, as per real life when the currency stops trading with foreign markets.”

    That’s not accurate. I’m pretty sure Anshe Chung’s services are safe. ;)

    In reality everyone trades L$ for a profit so you’re putting something in someone’s pocket regardless.

    Also if you understood how the LindeX worked you’d realize that’s not how they manipulate L$. They’re a little trickier than that.

  17. Carl Metropolitan

    Jan 3rd, 2008

    Linden Lab is not letting SL “banks” and “financial institutions” use the RiskAPI?

    Well–duh. The last thing that LL wants it to have these parasitic ponzi schemes running around claiming “RiskAPI” as a Linden stamp of approval.

  18. Peter Stindberg

    Jan 4th, 2008

    What the commentors so far seem to miss is that LL takes 150% (one-hundred-and-fifty) of the amount they think you got fraudulently. I think most ppl would agree that taking away fraudulently acquired L$ from an unsuspecting receiver is just tough luck. But as some commenters mentioned, this happens in RL as well.

    But the extra punishment of another 50% to the receiver of the money is what sounds pretty much unfair.

  19. DaveOner

    Jan 4th, 2008

    That extra 50% is probably because most Lindens are bad with numbers! ;)

  20. Jessica Holyoke

    Jan 5th, 2008

    Two points,

    One is that Lewis PR contacted Massively and stated that the JP Linden announcement was for currency traders and not solely residents.

    The second is a story that should help things out. Many respondents are saying that the Linden dollar is similar to currency, where the Lindens describe it as a digital or property right. Additionally, the government takes counterfeit currency out of circulation. The Linden dollars mentioned aren’t counterfeit and Linden Lab can’t be a government some days and a corporation others.

    SOOO lets say Carl takes Stu’s Visa card and goes to the Buy More. Carl uses Stu’s card to purchase a big screen TV for $4000. Visa pays the Buy More, less a fee, the money for the TV.

    Carl then lists the TV for sale on Craig’s list. Stacey sees the ad and visits Carl. She sees the receipt and pays $3800 for the TV from Carl.

    Stu reports the card stolen to Visa. Visa takes the money back from the Buy More. The Buy More could write off the loss on their taxes or make an application to their insurance provider, stating that they sustained a loss.

    Stacey decides to have her remote programmed by the Nerd Herd and takes the TV to the Buy More. The TV’s value now is $3800. The Nerd Herd sees that the TV is the one sold to Carl.

    In the real world, nothing happens to the TV. Its still owned by Stacey. She is a bona fide purchaser, meaning she took the TV by providing something of value and without notice of it being stolen. The Buy More still has a civil claim against Carl for $4000. That’s who they have to pursue. (If Stacey would have bought the TV off of the back of a truck, that’s a different story because that’s notice. Also if she received it as a gift, it would be a different story because she didn’t give something of value for it. But that’s something for a court to decide, not the Buy More.)

    In the Lindens’ view, the Buy More takes the TV and the iPod Stacey bought from them to make back their $4000.

  21. chmarr walcott

    Jan 7th, 2008

    seems massivly have removed my posts about this subject so fuck em

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