GOM Off-line

Gaming Open Market have just gone off line while they investigate a ‘fraud’.

The first report of this seems to be on Andrew Mactavish’s blog. The GOM site currently states:

GOM is Offline We are temporarily closed dealing with a recent incident of fraud. For those of you waiting, PayPal withdrawals will be paid out this morning. Currency transactions will be handled as usual.

We\'re sorry for any inconvenience this might cause, and we\'ll be back up and running as soon as possible.

I'll post if I find out more.

Comments

[Jefferson Washburn]

Here is an e-mail which was sent out to all GOM members.

---------------------------------
Ok, here's what's going on.

Sunday afternoon, a new client purchased over $3000.00 worth of ISK and SWG credits. He nagged us for delivery, and then immediately after receiving the goods, reversed the charges claiming we never delivered. He was making use of a well-known loophole in PayPal's chargeback policy that favours the purchasers of "intangible goods" over the sellers. He explained this to us in an email he sent today. He claims the ISK and credits he stole are "payment" for the lesson he tought us.

This incident has been reported to the FBI Internet Fraud Department, and tomorrow to the RCMP. We have compiled as much information as possible on this person, including his name, address, phone number, email addresses and the IPs used to log into our site. All of this information will be turned over to the authorities.

Now, the complaints registered with the FBI were two-fold. The first was about this person who scammed us. The second was about PayPal. PayPal's policy rewarding the perpetrators of this type of fraud not only makes it easy, it actually *encourages* it. Please take this as a lesson learned the hard way. If you deal in any "intangible goods", be it downloaded software, music, documents and data, or game currencies or items, PayPal is *not* your friend.

We are currently providing as detailed information as possible to the PayPal fraud department, but we're not holding out hope for a favourable settlement. Our PayPal representative has made it very clear that we can provide any evidence we want, but that it doesn't matter - we deal in intangible goods and hence have no rights.

*** NOTE: Any employees of CCP or Sony Online Entertainment (or any other game publisher for that matter) are encouraged to contact us. We know we violate your user agreement - we just want this behaviour to stop! It hurts everyone, *including* your paying clients! I know you have detailed transaction records proving exactly when and where those transactions were made. This information could help get the ball rolling. Linden Lab has worked with this. So can you! ***

Now we have always called ourselves a "secure way to trade". By that we mean that we *actually* provide seller protection because *we* guaranty delivery. We are holding true to this policy, and absorbing this $3000.00 loss. This $3000.00 is approximately 70% of our profits since January. We didn't build GOM to make us rich. We built it as an experiment in digital world economies, and to provide people like you with a cheaper and more efficient alternative to eBay. We cannot afford to be tought another lesson.

Until further notice, all trading in *all* games except Second Life is halted. All currency you may have on deposit with us will be returned to you at a mutually convenient time. Please request a withdrawal and contact either Tom or myself to schedule it. PayPal withdrawals will also be made on our regular sporadic schedule.

Linden Lab (creators of Second Life) is the only publisher to support our efforts. Second Life business will continue as usual. Please accept my apologies for this delay. Linden Lab has worked with us before on this type of fraud, and we're confident that our future with them will be long, happy and prosperous for all. :)

Keep yer stick on the ice.

Jamie Hale
President - Gaming Open Market Corp.
jamie@gamingopenmarket.com

[Tobold]

Very interesting case. Note that the fraudster did not end up a single real world dollar richer, he only charged back what he paid. So effectively, what he "stole" was "only" virtual currency. And whether that is a crime or not depends totally on the question of whether virtual currency can be a real life property. At which point we all have to go back two threads and read Richard Bartle's paper on the pitfalls of virtual property.

I don't see how you can blame PayPal though. Either they allow chargebacks in trades of intangible goods, or they don't. As they do allow it, fraud is possible by chargebacks. If they wouldn't allow it, fraud would happen the other way round, with the seller never delivering the intangible goods. The current policy favors the buyer over the seller, which I would consider the better of the two options. Unless you involve some sort of clearing house, I don't see how they could implement a policy that would prevent fraud.

[Darren]

Julian's blog entry is probably a fair example of the typical exchange between PayPal and every hapless virtual trader.

[Alan Stern]

Few things.

There's a new message up on GOM's home page to the same effect as the above-posted e-mail.

I love that exchange on Julian's blog. Besides illustrating the difficulties inherent in this whole mess it reminds me of every conversation I've had with customer service. (i.e. The time I called the credit card company trying to learn why I was being assessed a penalty for paying the amount their automated phone system said I owed. Or the time I sought Alienware's assistance in fixing the computer I bought from them.)

[Cory Ondrejka]

tobold> I don't see how you can blame PayPal though. Either they allow chargebacks in trades of intangible goods, or they don't. As they do allow it, fraud is possible by chargebacks. If they wouldn't allow it, fraud would happen the other way round, with the seller never delivering the intangible goods. The current policy favors the buyer over the seller, which I would consider the better of the two options. Unless you involve some sort of clearing house, I don't see how they could implement a policy that would prevent fraud.

The digital world operators do know whether the delivery happened and a standard could easily be established to allow delivery reporting. Or, a digital world could decide to act like an issuing bank and say, for example, that the maximum liability in digital currency is L$50. In other words, if a chargeback happens, it is treated as fraud, the person who sold their digital currency gets most of their currency refunded and the user who made the chargeback is suspended or banned from the world.

Obviously, this would require cooperation between the digital world operators and the trading sites, which comes back to one of my core disagreement with Bartle et al. Since world creators can't stop commodification -- yes, they *may* be able to reduce it, but there is no evidence that they can stop it -- there is tremendous harm by pretending to block it and forcing it into black and gray markets. Black markets neither protect customers nor allow legitimate cooperation between digital worlds and 3rd party traders.

It's time to stop ignoring the elephant in the room and realize that commodification is a basic feature of digital worlds. Only then will fair and rational approaches be taken to address the problems that it raises.

[Staarkhand]

With all the rabid anti-commodifiaction players out there I'm surprised this hasn't happened before in a vigilante attempt to shut down these "criminal" (as they see it) organizations. I thought that PayPal's policy for intangible goods had received wide enough publicity, but maybe I'm skewed by reading TN and PlayMoney.

This case certainly does get to the heart of the "is virtual property owned" question. Obviously it would be huge if GOM's case was upheld, but if/when it isn't, does this mean the end to virtual middlemen, or does it mean the end of PayPal for virtual transactions, perhaps in favor of a yet unrealized competitor? The difficulties of protecting the seller's rights have been well documented here, but maybe demand is high enough that players would be willing to absorb the risk - most view virtual sales as inherently risky anyhow.

[Staarkhand]

With all the rabid anti-commodification players out there I'm surprised this hasn't happened before in a vigilante attempt to shut down these "criminal" (as they see it) organizations. I thought that PayPal's policy for intangible goods had received wide enough publicity, but maybe I'm skewed by reading TN and PlayMoney.

This case certainly does get to the heart of the "is virtual property owned" question. Obviously it would be huge if GOM's case was upheld, but if/when it isn't, does this mean the end to virtual middlemen, or does it mean the end of PayPal for virtual transactions, perhaps in favor of a yet unrealized competitor? The difficulties of protecting the seller's rights have been well documented here, but maybe demand is high enough that players would be willing to absorb the risk - most view virtual sales as inherently risky anyhow.

[Richard Bartle]

Cory Ondrejka>one of my core disagreement with Bartle et al. Since world creators can't stop commodification -- yes, they *may* be able to reduce it, but there is no evidence that they can stop it -- there is tremendous harm by pretending to block it and forcing it into black and gray markets.

They can stop it in small virtual worlds very easily. There are some virtual worlds that have been running for over a decade and have no commodification whatsoever. Some of these are commercial virtual worlds, too.

>Black markets neither protect customers nor allow legitimate cooperation between digital worlds and 3rd party traders.

So using your argument we should allow competitors in the Olympics to take performance-enhancing drugs because we can’t stop them. Then we can thrill to the sight of athletes vying to win the 100m before the massive doses of steroids they have taken burst their hearts.

Just because you can’t stop something completely, that doesn’t mean you have to make it legitimate.

>It's time to stop ignoring the elephant in the room and realize that commodification is a basic feature of digital worlds. Only then will fair and rational approaches be taken to address the problems that it raises.

This is where you and I part company. I do not believe that commodification is a basic feature of virtual worlds, as evidenced by the fact that it doesn’t happen in, oh let’s be generous, 90% of the VWs listed on the MUDconnector. I am happy for virtual worlds to come in two flavours, commodified and uncommodified. You, however, feel that all virtual worlds should follow the same, pro-commodification rules, under the defeatist proposition that it’s impossible to stop. This would kill the smaller virtual worlds, which don’t have the problem you’re trying to fix. What’s more, it would screw up virtual worlds with different business models or solutions (technical or operational) yet to be invented.

Why do you keep on saying this? Why do you think that it’s impossible for commodified and uncommodified worlds to exist side-by-side? I’m basically in favour of having both – I really don’t see why you want one to be eliminated in favour of the other.

Richard

[Staarkhand]

Help, mod meh.

[Lee Delarm]

Some people feel like someone saying "legalize VW trade" is saying "legalize satan for president".

There's almost nothing you can do to argue with these people, it's quite pointless trying to even talk to them when they're not only not going to come around to the simple facts supporting VW trade, they'll go as far as stretching the fabric of reality and pinpointing some urban legend friend that had such and such happen to them which is why it shouldn't be done.

Thank god for TN :)

[Tim Webb]

Jamie> *** NOTE: Any employees of CCP or Sony Online Entertainment (or any other game publisher for that matter) are encouraged to contact us. We know we violate your user agreement - we just want this behaviour to stop! It hurts everyone, *including* your paying clients! I know you have detailed transaction records proving exactly when and where those transactions were made. This information could help get the ball rolling. Linden Lab has worked with this. So can you! ***

I hope the FBI laughs at OGM as much as I laughed when I read this bit. “We know we’re breaking the rules and hurting your paying clients, but let’s work together to stop the people who break the rules and hurt your paying clients when they hurt us.”

You want to cry “fraud” on the gentleman that has profited $3,000 dollars from ignoring your rules, while you were attempting to profit from disregarding the rules of the Virtual World. Help me with this Jamie, when is it okay to break the rules and when isn’t it?

There’s another label for people who abuse the rules; cheater.

[Cory Ondrejka]

Richard,
Sorry, let me amend that to "commodification is a basic feature of many digital worlds." I'm not saying that all digital worlds must be commodified. What I am saying is that if the world is commodified, that both the players and the world will be better served in the long run by acknowledging these markets. Ths is a separate argument from my position that ties to the real-world (including financial ones) are a net positive for digital worlds. This argument is that the ills of black markets -- fraud, lack of enforcement, lack of consumer protections, labor exploitation -- need to be addressed in the worlds that see substantial digital item/currency markets and that the most immediate method to address them is to legitimize the markets.

[Barry Kearns]

Staarkhand> Obviously it would be huge if GOM's case was upheld, but if/when it isn't, does this mean the end to virtual middlemen, or does it mean the end of PayPal for virtual transactions, perhaps in favor of a yet unrealized competitor? The difficulties of protecting the seller's rights have been well documented here, but maybe demand is high enough that players would be willing to absorb the risk - most view virtual sales as inherently risky anyhow.

I'd definitely hope the "unrealized competitor" would be the more likely of the two... the opportunity is certainly present for some kind of GOM-like brokerage service, and it's certainly do-able from the financial end so long as they partner with a financial conduit that is free from the risks of fraudulent chargebacks.

Of course, the other side of the equation still has its inherent risks, driven from the degree of enforcement that game providers choose to pursue regarding out-of-game transactions. The other major risk associated with a brokerage service is that a non-sympathetic game provider is going to recognize the transactions and then seize/cancel the associated accounts. From a brokerage "seller" perspective, this event would be equivalent to a "warehouse fire" at the brokerage.

Non-brokerage "reseller" 800 pound gorillas like IGE can generally absorb a series of "warehouse fires" due to the exorbitant markups that they charge... not so for low-margin brokerage services.

Is such a brokerage service ultimately workable in the face of game providers who oppose such transactions? I don't know. I'd like to see it, but I don't know of anyone who has worked out the mechanics of it to a sufficient degree to ensure a high enough ongoing success rate to make it viable, without also having huge mechanical hurdles to overcome. That's a shame, IMO.

[Jamie Hale]

Tim,

First, it's GOM. Gaming Open Market.

People warned us that this type of fraud would occur. We listened, and built the site anyways. I wrote off that $3000.00 the instant I saw the emails from PayPal. The loss hurts, but the issues surrounding the loss hurt more.

My frustration is not with the pedestrian that stole from us, but with PayPal's policy that openly encourages this type of scam. My complaint to the FBI included both.

PayPal effectively sticks their fingers in their ears and blows raspberries at the victims. No amount of proof that these trades occured will convince them. And that is why I was calling for game publishers to step forward. If they're not going to eliminate trading from their games, then at least assist in eliminating the fraud that occurs. With minor pressure from them, PayPal could easily start considering signed statements as proof enough in place of courier tracking numbers.

I know users of my site violate the terms of service. I have sent emails to each game publisher explaining in great detail why a service like mine is extremely beneficial to them and their users so long as Cory's "commodification" exists. I even wrote that we would close down the markets in their games if that's what they wanted. All I was asking for was a response from them. :)

I'm still waiting...

[Barry Kearns]

Tim Webb> You want to cry “fraud” on the gentleman that has profited $3,000 dollars from ignoring your rules, while you were attempting to profit from disregarding the rules of the Virtual World. Help me with this Jamie, when is it okay to break the rules and when isn’t it?

Well, let's see... one of them is a federal crime in the real world (felony fraud), and one of them is breaking an in-game rule. You're logically OK with treating them as equivalent?

Perhaps you also think it's OK for someone to steal your car if you moved an extra space in Monopoly (thereby avoiding in-game bankruptcy), eh?

After all, both of them are breaking the rules, right?

Tim Webb> There’s another label for people who abuse the rules; cheater.

Yes... and there are also labels for people who are unwilling/unable to differentiate between the relative moral importance/severity of different actions. Sociopath is the first one that leaps to mind.

[Luca Girardo]

Hmm, I found interesting that the GOM case is something very similar to the one discussed already some weeks ago in May. The similarities are pretty striking and I wonder if the author of the fraud read the article/discussion too and was inspired but it.
A lot of "if"s but I suppose it is worth a thought about it.

[Barry Kearns]

Luca Girardo> I found interesting that the GOM case is something very similar to the one discussed already some weeks ago in May.

I think the final line in that article expresses the key concept to take away from all of this, IMO:

Cringely> I DO see here a wonderful business opportunity, though, for someone to come up with a reliable way to handle payments for virtual goods. That would be worth its weight in gold, 'er platinum.

[Staarkhand]

Yeah, this is what I'm talking about. If PayPal's policy is really that inflexible, what is to stop a relative small group of players from systematically taking even IGE for all they're (virtually) worth? Or at least crippling them to the point of removing any profit?

Seems like someone out there would want to do this, with all the ire that gets raised when discussing this topic.

[Staarkhand]

Some things are against convention. Some are against established laws. Some are what an average member of a society would call "wrong".

Assuming that something (e.g. eBaying) belongs in all of those categories just because it belongs to one of them is not a basis for an argument. We know what GOM does is against the rules. But one may still ask if it should be.

[ren]

The thread has been games/.’d. Who have an interesting link to the Second Life forums where it says:

meta 06-21-2004 04:38 PM Zeppi Schlegel Member Registered: Nov 2003 Location: Posts: 28 /meta Hi, sorry for the delay in replying - I really should check the forums more frequently.

*** The fraud was perpetrated through PayPal and *not* through the site. Your cash and currency is safe. I locked out the site so I could take a few breaths and get my anger under control. ***

Yesterday, I had a user breeze through spending over $3000 USD on EVE and SWG. Immediately after taking delivery of the ISK and credits, he reversed all the payments claiming he never received the goods. This is a well-known loophole in PayPal's seller protection policy. Basically, I have *no* recourse at all. PayPal accepts *no* form of proof of delivery except physical waybills (UPS, FedEx, etc).

This is the second incident of fraud like this in 2 weeks. The first time, they user cashed out to Second Life, and thankfully, the good folks at Linden Lab came through and helped out. We'll end up losing a tiny bit of the $1200 worth of L$ stolen from us, but not enough to worry about.

This time, however, we won't be so lucky. CCP (publishers of EVE Online) haven't replied to our emails, and even if they do, PayPal has *no* interest in any form of proof other than that of physically shipping something.

So basically, we're out $3000, or about 70% of our profits since January. And to be completely honest, it hurts.

Now, I don't want to point fingers here, but it's fairly obvious who the scammer was associated with. This type of scam has occured before, and will continue to occur so long as PayPal maintains their idiotic policy.

As mentioned on the site, we will be up and running shortly. I just needed a few hours to get things straightened up.


Jamie Hale (Zeppi Schlegel)
President - Gaming Open Market Corp.
jamie@gamingopenmarket.com

[Richard Bartle]

Lee Delarm>Some people feel like someone saying "legalize VW trade" is saying "legalize satan for president".

Why do you think that is?

Richard

[Richard Bartle]

Cory Ondrejka>Sorry, let me amend that to "commodification is a basic feature of many digital worlds."

OK, that's fair enough.

>What I am saying is that if the world is commodified, that both the players and the world will be better served in the long run by acknowledging these markets.

That depends on how the virtual world is designed. When commodification comes a VW's way, the VW is either going to be able to cope with it or it isn't. If it can cope, fine. If it can't, its developers have to decide whether to do a rewrite so it it can cope, or to reduce commodification to a manageable level.

It's as if there were an emerging fashion for the audience singing along in stage musicals. Some musicals would flourish if the audience joined in, but others would have bad problems as it would be inappropriate for their subject matter. Either these latter would have to be rewritten or the practice of singing along would have to be banned for them. You're saying that in the long run it would be better for musicals to go with the flow and be designed from the ground up to support singalongs, and for existing musicals to be rewritten so they embraced them. I'm saying that if this happened then a whole class of musicals which non-singers enjoy would be lost, and it's better if theatre owners get to choose whether to allow singing along or not. I don't particularly mind which of the three choices they take, so long as they do get the choice.

>This argument is that the ills of black markets ... need to be addressed in the worlds that see substantial digital item/currency markets and that the most immediate method to address them is to legitimize the markets.

There are other costs to legitimising black markets, though (which is why we don't see LSD for sale in supermarkets). In virtual worlds, for example, legitimising the sale of virtual objects for real money can take away a lot of the reasons why people enjoy playing in the first place.

Richard

[PS: I already posted this once, but typepad ate my message. If something similar suddenly appears, it remembered it...]

[Bruce Boston]

So, contrary to better judgment, I think I'm gonna jump in here.

First, let me state that I'm saddened to hear of this loss. I was very excited about GOM, to the point where when they first came out, I shut down the FirstBankofThere.com and put a big notice, "Please go see GOM, and Tbux.com." It has also been exciting to watch the Therebuck come back after Black Friday.

Staarkhand:
"If PayPal's policy is really that inflexible, what is to stop a relative small group of players from systematically taking even IGE for all they're (virtually) worth?"

So I think this points out a key issue. Personally, I am reluctant to put the blame on Paypal here. They have a service. They are very clear, and very up-front about that service. People use that service in all kinds of ways. Paypal has protection for certain types of transactions, and they have no protection for other types of transactions. I fail to see the crime that they have committed here. We could argue that this is bad business, but I'm not sure that's a crime. For example, Fire insurance doesn't cover water damage, unless its due to a fire.

Now, I am not saying that a crime didn't happen here. One did. A serious one. But, the enforcement of civic laws is the duty of the criminal system, and not private businesses.

The reason that IGE isn't put out of business because of Paypal's policies is because they have legal recourse through the courts.

-bruce

[Corey]

Bruce Boston>The reason that IGE isn't put out of business because of Paypal's policies is because they have legal recourse through the courts.

What sort of legal recourse do they have that GOM does not?

[Bruce Boston]

Corey> What sort of legal recourse do they have that GOM does not?

None. That's the point. GOM has the same legal recourse that the big guys have.

-bruce

[Kenneth Dembner]

Out of curiosity, what kind of legal recourse do the 'big guys' have, in such a case?

[John]

I'm also curious about these legal recourses. This is a relatively high-profile deal in the virtual world community. Might we see some copycatters in the next few weeks targetting IGE and the like?

[Bruce Boston]

Hi Kenneth,

Nothing sexy, mainly local courts. I think GOM is on the right path with contacting the FBI.

Also, most companies use prevention, over repair. I know There.com had over 200+ employees at its peak, plenty of financial backing, and access to the best lawyers in the industry. Even so, there was (and still is) a daily limit of $100/day. Even with this we are at significant risk, as multiple accounts, and multiple cards are very easy to create. For the most part, $100/day is more than enough for 99% of all honest consumers.

Also, I think it’s important to note, these problems are hardly new, or unique to virtual worlds or even payment systems. Visa’s policy for years has been they don’t cover payments made with fraudulent visa cards. Even if you take the guy’s fingerprints and hand a very tangible product to them with 20 witnesses, if the card was stolen, most merchant accounts with visa don’t cover this. I am sure there are programs out there that may cover some things like this, but I think they are akin to insurance systems where everyone pays a little extra for the security and if you have too many incidences they kick ya out of the program.

Cory O> “for example, that the maximum liability in digital currency is L$50.”

Who’s liability?

-bruce

[MM]

I don't think comparing a list a college students side projects to Everquest is realistic. Let's throw out all the Muds that NEVER have 1000 concurent players, and see how many of THOSE are 'commodified'.

There's got to be demand before anyone's going to buy anything. I've only seen a few MUDs that have communities that size, and they have all been commodified. "Joe's Mud" hasn't been commodified because there aren't enough people that think the items or characters are worth money.

And it's foolish to try to stop it anyway. The elephant is in the room, anything else is denial. I'm really not in favor of the practice as a gamer, but it is hear to stay regardless of how this turns out. Why let the crooks control it? That's got to be worse than any perceived threat to gameplay.

[DivineShadow]

I would suggest a read through PlayerAuctions http://www.playerauctions.com/ fraud board. It is full of similar stories from probably hundreds of sellers, dating back years. (try entering the following search on Google "site:www.playerauctions.com fraud" for about 8k hits).

I don't get the idea of knowing about a problem (PayPal chargebacks) that *will* happen (no 'if' here) and not taking preventive measures or adding it to the plan as part of the cost of doing business, and later shutting down when the problem does crop up.

[Richard Bartle]

MM>Let's throw out all the Muds that NEVER have 1000 concurent players, and see how many of THOSE are 'commodified'.

If there were laws brought out to regulate virtual worlds, and these laws prevented virtual worlds from functioning unless they adhered to banking-style regulations, those MUDs that had never had 1,000 concurrent players really WOULD be thrown out. They could only exist if they flouted the law.

My point was that there is a spectrum of virtual worlds, some of which are OK with commodification, some of which aren't OK, and some of which are ambivalent. Commodification is going to mean laws at some stage. If those laws apply only at one end of the spectrum, that screws over those at the other. You seem to be advocating a cut-off point based on numbers of players. OK, so anything with fewer than 1,000 concurrent is non-commodified and anything over is commodified. Does SL have 1,000 concurrent players? Well, maybe it does now with the There refugees, but it didn't 6 months ago. Does Wheel of Time have 1,000 concurrent players? Yes, but it has no commodification problems to speak of (as far as I know).

Instead of setting arbitrary limits, why not let the developers simply decide whether they want their virtual world to be commodified or not? What do you have against that?

>There's got to be demand before anyone's going to buy anything.

There's a demand for virtual worlds where buying stuff with real dollars is not tolerated. Shouldn't this demand be given some supply?

>And it's foolish to try to stop it anyway. The elephant is in the room, anything else is denial.

"I can't think of a way to shoot the elephant" is a piss-poor reason to let it sit on you.

Richard

[Tobold]

Isn't commodification a result of (bad) game design? A MMORPG in which there is no way to transfer items or currency from one player to another would be feasible, and it would have no commodification. If you absolutely wanted the game to have trade, you could make transfer of items and currency possible only via in-game auctions. Shoo, shoo, elephant gone.

Only if you allow high-level player A to give low-level player B 1 million platinum pieces and the sword of uberness for free will you have commodification, including eBay, PayPal, GOM, IGE, and some scammers. And I don't see any valid reason why such uneven transfers have to be allowed. Morally it does not make a difference whether you "cheated" by getting 1 million PP from eBay for $50 or from a guild mate for free.

I think there is room for games both with and without commodification. It is just the middle ground, games like EQ, which encourages twinking but tries to suppress commodification, which have a problem. Neither a game with no direct trading, nor a game in which the virtual goods are sold directly by the game company would have a problem with a black market.

[Tek]

Richard>"I can't think of a way to shoot the elephant" is a piss-poor reason to let it sit on you

Technically, I think this elephant is supposed to have its invincibility flag on--unless Richard Garriott is controlling it perhaps. The point of it is that you can't annihilate commodification. But this doesn't mean you can't load your gun with tranquilizer darts. As your example with the Olympics demonstrates, this is what is called for both there and with VWs, since I see them as suitably analogous.

MM>Why let the crooks control it? That's got to be worse than any perceived threat to gameplay.

Did you actually consider your question?

Here is my answer to it, and why Richard's analogy is particularly lucid:

Rules are being broken that diminish the spirit in which the entity (game, world, ...) was created.

The use of steroids in the Olympics is banned because it destroys the spirit of physical competition. The victims are the spectators and, more importantly, the innocent competitors who respectively watch and participate because they enjoy the core ideal. Now let "use of steroids" and "the Olympics" become "commodification" and "VWs"--and let "spectators" -> "Terra Novans" :) (though most of us qualify as both spectator and competitor). I think we can agree that banning steroids in the Olympics is warranted; so to first order, it makes sense to ban the RW sale of virtual items.

In addition to the loss noted above, we have the problem of loss of immersion. The best analogy I have for that is the rule of common courtesy to turn off one's mobile/pager while at the cinema. While the legal implications aren't there, I've heard multiple stories about fistfights over the matter. In any case, the preservation of immersion and fair competition are both important, though I imagine most players heavily favor one or the other.

The most important point to remember now is that there is nothing binary about this: 1 in 10 people using steroids/IGE is much worse than 1 in 20. This is the crux of the argument for prohibiting such activities.

So, how about the side effects of a black market?

I can't see any negative ones. I mean, the crime lords of IGE aren't taking out hits on other players. The closest I can come up with is that the developers are ignoring a chance for further revenue. But, of course, I'd rather argue they are losing subscribers (net change) by embracing the virtual item market, and thus a possible net loss in revenue. Someone please elaborate on how the innocents are being hurt by this.

We do get a positive side effect though: an underground market has a lower profile. It breaks immersion much more quickly if the developer is posting ads for selling items on its home page or in-game.

As far as victimization is concerned, we have crooks swindling crooks, since both are breaking the world's terms of use. We're banning firearms and only criminals are getting shot. This isn't a compelling argument for legalization.

[Lee Delarm]

Back to Richard, I believe that some people believe so vehemently that their time is "cheated" from them, or made less valuable by other people who put a higher morale (and real?) price on their characters.

Most people I know in the US at least, would be willing to sell out even their most prized possessions at the right price. The only difference between those who sell and those who don't is the value they put upon the objects in question.

I pretty much gurantee you that someone who says they would never sell their character/items, etc will give in once an appreciatable price is reached, and the price would be MUCH higher than is currently in trade.

This is why they see these people as "bad" or "immorale" because they value their objects so much more (even though comments such as "it's just a game" are thrown around) that devlauing the characters and items to a level where normal people can buy it disgusts them.

I would imagine the attitudes are similar between things the rich and the poor do differently. Things where the poor would nearly die (or literally) such as throw food away whereas the rich could care less. Whether they like it or not it comes down to not a judgement of morality, but one of capitalism and choice in a market system.

[ren]

Over on games/. someone made the point about virtual transactions: why not use access codes and ship them, that way there would be a physical transaction which should fall within the comfort zone of service providers like Pay Pal and the authorities.

Well - it's an idea.

[Lee Delarm]

Ren>Over on games/. someone made the point about virtual transactions: why not use access codes and ship them, that way there would be a physical transaction which should fall within the comfort zone of service providers like Pay Pal and the authorities.

Unfortunately, most companies such as GOM conduct business on a small scale and the cost of buying and sending a personalized package would be detrimental to their company. It apparently isn't enough that paypal has a recording of the transaction, the game company has a recording in server logs, the business has screenshots and personal logs and the player has a ton of money suddenly, why should PayPal suddenly change their Nazi ways over a piece of paper which would admittedly hold more weight in court that all that evidence combined?

Quite obviously the system is skewed if a single piece of paper can hold more evidence that a trunkload of virtual footprints. People need to get out of the dark ages *sigh*.

[Tek]

Tobold>A MMORPG in which there is no way to transfer items or currency from one player to another would be feasible

Whether or not players would actually enjoy this is one issue, but even before that, you have to get them to buy the game; I imagine most players think they would positively hate such a rule. It might be worth an experiment, but I don't see anyone serious adopting this (until the experiment has positive results).

In my previous post, I forgot to talk about taking the immersiveness of the VW into consideration. Some worlds have more clearly defined ways of how things are supposed to work. In the Star Wars universe, you become a jedi through intensive training (SWG puts emphasis on intensive, and not so much on training, heh); buying a jedi character off of someone destroys whatever meaning/story is associated with it (for argument's sake, consider only the good). On the other hand, Second Life is a "free-form" world (accurate?), where there is no a priori reason why things shouldn't happen in a given way. So commodification in SL does not break immersiveness the way it does in other games. The same could go for the competitive aspect, since I think the competition is mostly artistic/skilled. Thus, where SWG should probably ban item sales, the same reasoning holds less water with SL.

[Tim Webb]

I am truly amazed by how intelligent some of the posts here in favor of commodification are. Unfortunately these posts lack a certain amount of foresight.

Consider what you are advocating, where real world laws apply to virtual world items and transactions. Some of you even suggest that such laws apply even in virtual worlds where the creators do not want commodification at all. When you begin to have real world laws interfering with the virtual worlds (Never mind the jurisdictional nightmares, you think you have it bad now with Nigerian scam emails... wait until they figure this one out!) even when it is against the will of the creators and maintainers of the virtual worlds you have undermined the point of being in a virtual domain.

Let’s be very blunt here and boil this down to one line:

It is being suggested that a RW value associated with a VW item should be enforceable under some RW laws, even if the VW owner doesn’t want his VW items to be valued.

So now if a VW allows me to steal or loot (either through normal game mechanics or an exploit) items from other players, I should be accountable for the RW value of their loss? This isn’t an analog about some elephant; this is exactly what will become of any RW laws interfering with VW property value.

Lee> This is why they see these people as "bad" or "immorale" because they value their objects so much more (even though comments such as "it's just a game" are thrown around) that devlauing the characters and items to a level where normal people can buy it disgusts them.

The reason I am personally anti-commodification is due to my well developed sense of sportsmanship. As soon as 3rd party influences from the RW (eBay, hacking utilities, macro utilities) give one player an advantage over another the VW (and the competition there of) has been compromised and the sport is lost.

[Tek]

Lee>Whether they like it or not it comes down to not a judgement of morality, but one of capitalism and choice in a market system.

You can argue it comes down to capitalism for the example of RW class disparity, but the case of VWs retains its moral nature since it is a decision whether or not to break the rules that everyone is agreeing to abide by. Using steroids in the Olympics devalues the winning of a gold medal because the rules were not followed. You can use economics to explain the change of values, but it is not the cause.

[DivineShadow]

On the RL issues, many here are looking at PayPal and thinking that they are the problem. They're just an extension of the financial *services* industry. Even if PayPal decided to honor somone's server logs (or what have you) a scammer would only need to move one notch up the chain and instead of calling PayPal to let them know their ID was used without permission, now they would have to call their Credit Card to let them know it was stolen, and used to fund a PayPal account or their banking info stolen and used. Do you think PayPal will absorb the losses from merchants happily?

While there are people who might go pull PayPal, Credit card or banking frauds with their own identity, there are people who don't. Lots of trojan horse programs and 'phishing' e-mails out there allow bad people to collect PayPal, banking , eBay and more information from the computer of an unsuspecting victim. They turn around and use (or sell) that information. The scammer that uses it gets the goods, the honest person gets dinged. Put yourselves in the shoes of the user who receives a 1000 illegitimate charge on his credit card form PayPal, or Flowers-r-us, or sex.com. He's likely to call his bank. He has minimal/no libility since the financial system is set up that way, charges flow backwards an the merchant is most often left without the goods or the money.
PayPal's 'delivery confirmation' policy is just a measure to lessen fraud and chargebacks, it is useful in *some* cases of fraud perpetrated by people using their own identity, but it can't do much for the third-party scammer scenario which is very common these days.

[Tom Hunter]

The current issue of the Economist (1970's disco shoe on the cover) in Economics Focus| "In The Shadows" - The Informal Economy Is Neither Small nor Benign (p76) that raises some questions that are of interest when discussing VWs and property.

The article points out that in developing countries the informal economy is equivalent to 41% of GDP in OECD countries its 18%. This economy exists in response to taxes, regulations, corruption and other factors. The article goes on to say that the grey economy may shave as much as 1.5% off the growth rate of countries such as Brazil and Turkey.

In VWs commodification and the current state of virtual property law makes for larger grey economies in VWs. This adds to developer costs by increasing customer care and other management costs (see this post by Jessica Mulligan http://terranova.blogs.com/terra_nova/2004/01/themis_group_pr.html) as well as alienating some players. Though we don't know the extent of the negative effect this has on growth an profitabilty of VW companies we can be sure there is one.

In the real world economists argue for changes in government policy to help make the grey economy legitimate because of the economic benefits that would provide.

Should the VW economists be doing the same?

[Richard Bartle]

Tobold>Isn't commodification a result of (bad) game design?

In some cases; in others, it’s as a result of bad play (aka cheating).

>A MMORPG in which there is no way to transfer items or currency from one player to another would be feasible, and it would have no commodification.

You’re arguing for a solution in code to a problem that is out-of-code. There are people who like virtual worlds just the way they are except they don’t like commodification. You’re saying that these people should have to play a different kind of virtual world that prevents commodification through code. Why should they have to do that? They may (in fact probably will) like that virtual world much less than the ones without the code changes. Just because some people insist on breaking the rules, that means you have to change the rules? No! Ask any kid in a playground what you do when someone breaks the rules: you throw them out and don’t let them play with you again until they’ve promised not to do it!

The rules of cricket say the bowler has to keep their arm straight during the delivery. If you bend your arm, that’s throwing rather than bowling, and you are penalised for that. You’re arguing that the cricket authorities should attach wooden splints to bowlers’ arms to stop them from bending them. It’s feasible, and it would stop throwing. Thus, your argument goes, if the cricket authorities don’t stop people from throwing when they could adopt this simple mechanism to do so, well surely that means they’ve given the green light to people who want to throw? I say that no, it doesn’t: people shouldn’t have to put up with unwanted and inconvenient changes to their game just because some people don’t want to play by the rules. Keep the game the same: those who don’t want to play by the rules should find some other game to play instead.

>Morally it does not make a difference whether you "cheated" by getting 1 million PP from eBay for $50 or from a guild mate for free.

Well under that morality, as I’ve said before, both practices should be banned.

>I think there is room for games both with and without commodification. It is just the middle ground, games like EQ, which encourages twinking but tries to suppress commodification, which have a problem.

There are many reasons why EQ might not want commodification. Here are two:

1) If they allow gift-twinking, that doesn’t open them up to anywhere near as many legal problems as they’d get if they allow sell-twinking.

2) It may be that the developers feel EQ can absorb the twinking that it gets from people gifting one another stuff, but that if it allowed full-blown commodification then the additional twinking that would result could shatter any remaining illusion that the game is "fair". It could be the straw the breaks the camel’s back.

Richard

[Richard Bartle]

Lee Delarm>Most people I know in the US at least, would be willing to sell out even their most prized possessions at the right price.

Bill Gates: Would you sleep with me for 20 billion dollars?
Britney Spears: 20 billion? You bet!
Bill Gates: How about 40 dollars?
Britney Spears (slaps Bill): No way! What kind of woman do you think I am?
Bill Gates: We’ve just agreed what kind of woman you are, we’re just negotiating the price.

>The only difference between those who sell and those who don't is the value they put upon the objects in question.

So from my example above, we should make prostitution legal? A similar argument can be made for just about everything, from selling internal organs to contract killing to selling children.

>Whether they like it or not it comes down to not a judgement of morality, but one of capitalism and choice in a market system.

Let’s say a very, very rich person wants to play in a virtual world that has no commodification. Capitalism and market choice being what it is, shouldn’t this very, very rich person be able to find a virtual world somewhere that has no commodification? After all, there’s a demand for such worlds, the person is very, very rich, so why don’t these virtual worlds exist? Because less rich people are commodifying them, and trying to use arguments that it’s OK because capitalism allows it to support their activities. Maybe the very, very rich person should buy a few politicians and get the law changed so that these pipsqueaks are fined out of existence if they try to commodify a virtual world. Then, all virtual worlds will be uncommodified. Capitalism wins again!

Richard

[CherryBomb]

I can't really blame PayPal for its policy. Without the cooperation of the game designers, there is no way to verify a transfer of virtual property, and most of the operators simply wish the issue didn't even exist. I don't see GOM getting much help from the FBI either. Fraud cases are messy and difficult to investigate, so they are usually ignored, even in the real world.

So, basically, nobody cares if you get screwed buying or selling virtual property. Caveat auctor.

[Bruce Boston]

Tom> "In the real world economists argue for changes in government policy to help make the grey economy legitimate because of the economic benefits that would provide. Should the VW economists be doing the same?"

Argue, yes. Require, no. There is a huge difference between RL economics, and VW economics, if for no other reason than participation in the later is absolutely voluntary.

At the end of the day, game developers should have the right (and do last time I checked) to set the rules of their game as they see fit. Yes, even if those rules don't work. And, yes, even if they are unable to enforce them. And yes, even if those rules mean zero customers. Bad business is hardly illegal. (note: illegal business is still illegal). To disallow game developers to set their own rules, would be like requiring all Stories/Books/Movies/TV Shows to end happily because happy books sell better. (counterpoint: see Romeo and Juliet, Shakespeare,1595)

-bruce

[Bruce Boston]

DivineShadow(11/20/03)> Not to be rude or pejorative, but ideally you figure out the risk factors/model before opening shop.
(http://terranova.blogs.com/terra_nova/2003/11/virtual_world_c.html)

DivineShadow> I don't get the idea of knowing about a problem (PayPal chargebacks) that *will* happen (no 'if' here) and not taking preventive measures or adding it to the plan as part of the cost of doing business, and later shutting down when the problem does crop up.

I too was very taken back by the response of fully pulling out of all markets due to a single problem that should have been foreseen. $3,000 transactions are just too high a risk, for any company to take, imho.

-bruce

[Bruce Boston]

Whoops,

"all markets" should be "all markets except 2L"

-bruce

[Barry Kearns]

Tobold> Only if you allow high-level player A to give low-level player B 1 million platinum pieces and the sword of uberness for free will you have commodification, including eBay, PayPal, GOM, IGE, and some scammers. And I don't see any valid reason why such uneven transfers have to be allowed. Morally it does not make a difference whether you "cheated" by getting 1 million PP from eBay for $50 or from a guild mate for free.

Precisely!

Tobold> I think there is room for games both with and without commodification. It is just the middle ground, games like EQ, which encourages twinking but tries to suppress commodification, which have a problem. Neither a game with no direct trading, nor a game in which the virtual goods are sold directly by the game company would have a problem with a black market.

I agree, but there are plenty of solutions that map to the middle ground between "no trading" and "twink hell via commodification".

Someone decides to twink 1 million platinum and the sword of l33tness to a new character (regardless of why, let's say it happened).

You can minimize or eliminate the major BENEFITS of twinking without eliminating tarde entirely, or going to a company-only-sales formula.

Make the sword of l33tness require character level 72 to wield. Likewise, put level restrictions on the cool armor, etc. Make NPC vendors (if they exist) sell only level-appropriate items.

Better yet, use the Diablo II currency solution and cap the maximum amount of currency that can be carried based on character level.

The point is, there are a variety of solutions which make twinking far less attractive, without having to go on a witch hunt for those who twink with financial capital instead of social capital.

[Barry Kearns]

Tim Webb> The reason I am personally anti-commodification is due to my well developed sense of sportsmanship. As soon as 3rd party influences from the RW (eBay, hacking utilities, macro utilities) give one player an advantage over another the VW (and the competition there of) has been compromised and the sport is lost.

And is the "sport lost" when a guild decides to twink up a new member with all the cool items that give him maximum advantage?

I hold that it is equally lost in that case... and if so, that your real objection should be to ALL FORMS OF TWINKING, not to just commodification.

I hold a fundamental premise to be that if no twinking is possible, impactful commodification simply will not arise... there is no benefit to it.

Eliminate twinking and you eliminate commodification. Eliminate commodification, and your sport is still lost due to social twinking.

The real enemy is not money entering into it... the real enemy is allowing the competitive advantage from twinking in the first place.

[Barry Kearns]

Richard Bartle> The rules of cricket say the bowler has to keep their arm straight during the delivery. If you bend your arm, that’s throwing rather than bowling, and you are penalised for that. You’re arguing that the cricket authorities should attach wooden splints to bowlers’ arms to stop them from bending them. It’s feasible, and it would stop throwing. Thus, your argument goes, if the cricket authorities don’t stop people from throwing when they could adopt this simple mechanism to do so, well surely that means they’ve given the green light to people who want to throw? I say that no, it doesn’t: people shouldn’t have to put up with unwanted and inconvenient changes to their game just because some people don’t want to play by the rules. Keep the game the same: those who don’t want to play by the rules should find some other game to play instead.

Now consider the case if the rules of cricket read that you must keep your arm straight if your team is from Kent, Surrey or Yorkshire if you want to avoid a penalty. All other teams are allowed to bend their arms without penalty.

Just because it's a rule, that doesn't mean that the rule is ethically or morally RIGHT. In this case, certain teams are being handicapped based on nothing that is happening in the game itself... simply because to who they are, or what they may have done in the past.

We see this analogous situation in many VWs, where social twinking is permitted, while twinking for financial reasons is cause for a permaban.

The game rules should be reliant only on (and only govern) in-game aspects... not legal out-of-game actions or attributes.

Do you think it's OK to penalize a game player or team during today's game just because they beat you last night at darts in the pub? If not, why not?