Linden targets buyers of fraudulent currency

By Eric Reuters

SECOND LIFE, Jan 3 (Reuters) - Linden Lab issued a warning on Wednesday that game currency purchased from sources other than Linden’s own LindeX exchange could be subject to confiscation and heavy fines, if the company determines the currency originated from a criminal enterprise.

A thriving black market in Second Life game currency flourishes on the Internet, sometimes offered at exchange rates far better than Linden’s official rate (currently about L$270 to US$1). Linden is attempting to discourage the practice by targeting buyers of currency.

Some currency trading sites may be selling currency acquired by illegal means. Linden’s currency, pegged to the U.S. dollar, has become a favored item of criminals with access to stolen credit cards or phished PayPal accounts. Linden dollars can be bought illegally and fenced on the Internet quicker and easier than dealing with real-world goods.

Residents purchase Linden dollars from third-party vendors at their own risk, wrote JP Linden on the official Linden Blog. “If they are discovered to be fraudulent — in effect phony — we will recoup them from your account.”

A related page on SecondLifeGrid.Net explains Linden Lab can penalize residents up to 150% for receiving currency the company considers stolen.

“As a penalty for participation in such fraud or violation, Linden Lab will reduce the Linden Dollar balance of the buying Second Life account (and/or any Second Life accounts owned or operated by, or affiliated with, the owner of the buying account), by any amount up to 150% of the amount of Linden Dollars involved in the transaction,” the company said on its website.

Second Life residents can buy and sell virtual currency, called the Linden Dollar, directly through Secondlife.com’s LindeX exchange. Linden Lab makes US$5 million a year on the spread between buy and sell prices and on transaction fees.

However, use of the LindeX requires a valid credit card, a stumbling block for many younger residents and European citizens.

“Over here, credit cards are a privilege of the wealthy,” said Stijn Van Hove of Geel, Belgium (Second Life: Daman Tenk). Van Hove buys and sells Linden dollars on DutchX, one of many third-party virtual currency exchanges that cater to European Second Life users without credit cards.

Van Hove pays a hefty premium for the service. He gets about 320 Lindens to the Euro on DutchX, as opposed to the official exchange rate of almost 400.

“I’m not the only one in this situation,” Van Hove said. “I’m pretty much the average European college student.”

But in addition to long-established sites like DutchX, residents can purchase game currency from a variety of sources, including eBay auctions. Honest brokers can be difficult to distinguish from sites selling stolen goods.

Linden cautions its customers to use its own currency exchange where possible, or to only deal with third-party exchanges with a track record and a reputation for fair dealings.

“We therefore urge you to make every effort to know your seller, and if in doubt, resist doing business with any seller you do not feel comfortable with,” JP Linden said.