Here is the response from the Facebook developer’s blog. The main notable quote for me is that “In addition to steps we’ve taken to build teams and technologies devoted to this issue and continual outreach to work with members of the ecosystem on ways to improve their practices, it is the responsibility of both developers and ad networks to make sure the content running in third-party applications is appropriate.” Also surprising to some people might be that ” more than 70% of our(Facebook) 300 million active users engage with applications each month.” There’s a lot more in the article and if you use Facebook and use applications in Facebook you should read the article.

The whispering that started and turned into a roar is from an article by Techcrunch. Besides the tabloid-worthy headline, the story tells of the many complaints now being received about some applications in Facebook. From the story, “Major media can’t stop applauding the companies long enough to understand what’s really going on with these games. The real story isn’t the business success of these startups. It’s the completely unethical way that they are going about achieving that success.”

The story continues to tell of the different ways that consumers are deceived. It says, “Zynga may be spending $50 million a year on Facebook advertising alone, fueled partially by lead gen scams. Wonder how Facebook got to profitability way ahead of schedule? It was a surge in this kind of advertising. The money looks clean – it’s from Zynga, Playfish, Playdom and others. But a large portion of it is coming from users who’ve been tricked into one scam or another.”

You should read through the full list of accusations to see if you believe it holds water. The question of course is, who is responsible, Facebook, the developers, or the advertising networks? Just a little note regarding “they should be checking it” statements… if you look at TV programs that have the disclaimer, “This is a commercial programs and the programmer and the network has not responsibility”…. these came about because at some time in the past someone did think “If it’s on TV, it must be OK.” Its getting to the point Facebook has to look at the number of people who are saying (rightly or foolishly) “if it’s on Facebook it has to be OK.”

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Here are some other stories along similar lines.

An article from Pixels and Policy about “Cybercrime booms in the Virtual World”. One of the best points “With no standardization between worlds, there is no way of knowing whether one source is making and cashing out Linden Dollars, Warcraft Gold, or any other in-game currency. This makes tracking accusations of money laundering extremely difficult.” It’s a wide-ranging article discussing potential fraud ranging from money-laundering to identity theft to even terrorism. Well worth your time if you have any interest at all in the subject.

Here is an older, yet very well read article about Second Life. Its been attacked by many in SL, but it raises some very cogent viewpoints about attempts to make money in a market unregulated by monetary police. My favorite quote is ” Put simply, you can seldom trust those with whom you’re doing business in SecondLife. Even supposedly well established, well regarded business citizens are prone to defaulting on any obligations which prove inconvenient. Whole banks will disappear over night, along with your L$ (LindenLabdollars) balance.”

And as in any self-respecting article about cybercrime, I MUST, I SIMPLY MUST say something about jurisdiction. In the article “Cybercrime leaves Cybercops in the Dust” it is discussing jurisdictional issues and other complications. The article states “Online fraud perpetrators are also finding clever ways to launder their money, using non-bank payment services, such as e-gold, to make it harder for investigators to “follow the money.” They also set up accounts with their proceeds and have associates in another part of the world withdraw the money as profit or reinvest it in other criminal activities or spam campaigns.” There’s also some fairly depressing statements in the article, which echo advice I have to unfortunately give out to many prospective clients with small (but large to them) losses in online arenas. “In the courts, where penalties are traditionally imposed based on damages, the extent of damage caused by cybercrime is hard to assess, and it’s tough to get victims involved. Individuals often don’t realize what’s happened, and businesses — breach disclosure laws notwithstanding — are generally reluctant to go to court.”

So apparently, the losses are much larger than reported, as the damage to a business’ reputation, well, they perceive that to be a bigger hit than any possible reward by taking the matter to court. As a lawyer focused on this type of case, I’m hoping that this will change.

3 for the B

#1 Know who you’re dealing with. If it’s a brick-and-mortar company, there’s always somewhere to complain to. But if you are paying real-life (or even simulated) dollars, have a backup physical address when you’re dealing with large transactions.

#2 Don’t react slowly. Note everything down while it’s fresh in your mind, complain profusely and even annoyingly to any and all authorities, and then keep these emails in a dedicated folder for this particular issue. Use dates, names, tracking numbers, all these resources in your complaints as you will have difficulty tracking that down later should it ever reach the point of going to court.

#3 Do not, ever, take what “they” say for granted. 5 years ago, domain name theft or trademark hijacking were rampant and “they” said it was a cost of doing business. Now, there are dozens of cases that indisputedly show a trademark may be used as a basis for recovering a domain name if certain things are proven. Don’t believe that it is hopeless, document like there’s no tomorrow and then protect your rights in any and all ways possible.

Jay Moffitt is a Tennessee attorney. This blog is for entertainment and educational purposes only and does not consitute legal advice or create an attorney/client relationship. Jay Moffitt is not certified as a specialist in this area by Tennessee and Tennessee does not certify specialists in this practice area. All comments will be answered promptly and courteously as long as they are germane to the discussion and do not contain specific game names or incidents.