Caveat Emptor

by Traci Nubalo
"Greed" and "Heartbreak" images from Lexxi Lefavre

Metaverse Tribune - April 3, 2012

(Our apologies - you may have to cut and paste the url addresses to get to the accompanying articles, until i can figure out why they are not linking correctly. Sorry!)

No matter what world we are in, if there’s something of value changing hands, you will find a dishonest person trying to scam a piece of the trade. Admittedly, they represent a very small percentage of us, but there are unscrupulous, scandalous people in both Second Life and in real life. Just knowing this should help eradicate any naive notions about being able to socialize on the grid totally without risk.

This being the case, I set about to explore fraud of varying types in Second Life, and to take a look at the effect that such behavior can have on the lives of residents here.

One piece of information I learned early in this investigation made me wonder about the true value of my avatar and her SL possessions. Terms of Service (TOS) says that lindens “are not real currency or any type of financial instrument and are not redeemable for any sum of money from Linden Lab at any time”. LL also protects itself by writing into that same TOS document language that says that it is not liable for losses incurred during a dispute among residents.

These factors have come into play in some cases where SL residents have sought the protection of RL authorities after being scammed in SL. When creating our avatars we “signed” TOS, agreeing that lindens have no true value. It’s then more difficult to prove damages once a fraud has been enacted.

Caveat emptor: “let the buyer beware”.

In 2007 some SL residents chose to interact with an inworld entity calling itself the Ginko Financial bank, attracted by the extravagant interest rates offered to depositors. After some months, however, Ginko suddenly announced restrictions on withdrawal amounts. Soon patrons began to receive only worthless “Ginko Perpetual Bonds” instead of lindens. By October the bank had closed its digital doors leaving as much as $750,000 USD lost in the virtual ether to the classic Ponzi scheme.

Here's a great piece that did on the event:

In another simple and effective hustle, an entity called Zen Cart sells lindens via attractive advertisements offering “deals” in lots of anywhere from 1,000 lindens to 100,000. But it’s the exchange rates that are at issue.

1,000 lindens = $8.50
25,000 lindens = $112
100,000 lindens = $400

Even if your avatar is enslaved on Gor and hasn’t been allowed out of the dungeon for years, you’d still know that about 270 lindens equal $1 USD.

Buying 1,000 lindens from Zen Cart offers the purchaser a mere 118 lindens /$1; a 25,000 linden purchase returns only 224 lindens/$1. And if I break my piggy bank to spring for the “best bargain” 100,000 linden package I am still not able to reach the everyday return offered at LindenX, the official SL exchange service.

Other virtual platforms have fraud issues, as well, it seems. On February 14th this paper published an account of a recent credit card swindle at Inworldz. This scam involved the use of stolen credit cards to purchase massive amounts of I’z - the Inworldz version of SL’s linden dollars - which were then quickly converted to cash. When the Inwordz resident claimed fraud to the credit card company, the transactions were usually reversed, leaving Inworldz holding the bag.

Other forms of fraud readily found in my exploration included intellectual-rights infringement, land grab schemes, linden laundering operations, product counterfeiting cases, and many others.

Some of those getting scammed are themselves part of the problem. The residents who yielded to the "hustle" of profiting from the exorbitant interest at Ginkos were partially trapped by their own greed. The Ginkos of the virtual world would never survive without residents who act on a desire to get something for nothing. The Zen Cart scam points out that residents can also be victimized by their own unwillingness to engage in the same levels of reasonably-cautious behavior here in SL as they would or should in RL.

On the MIT Technology Review website Linden Labs CFO Zee Linden offers this advice: “We caution our residents to be wary of anyone offering extremely high interest rates at no risk, either in the real world or in Second Life. If it sounds too good to be true, it probably is.”

So what steps can a resident take to protect themselves and their virtual belongings in SL?

Do not open attachments in a suspicious email, even if they appear to be innocent (like a .txt file).
Check your account status regularly by visiting
Keep your antivirus software up-to-date and scan for viruses regularly.
Change your account password frequently to keep your account secure.
If you have multiple accounts, use a different password for each account.
And be extremely careful if you decide to date or partner in SL.

** ** **

So we have looked at a few examples of fraudulent financial activities in Second Life and offered some basic suggestions on virtual security. Now we’re going to enter the ugly world of “dating fraud” in SL. This story has a little something for everyone: greed, deceit, infidelity, stalking, and blackmail. There's even a Second Life “fake death” thrown in for good measure. No kidding.

We will never know the entire truth of what happened. We do know this: a lot of good people were hurt by this. We hope that by telling what we learned the damage can at least be minimized, and the victims given a small measure of understanding. We use this tale as a great example of how careful we need to be in these crazy worlds we live in.

For obvious reasons, none of the names used in this section are the real names (in either RL or SL) of anyone involved.

** ** **

Once the people began to arrive it must have seemed that they would never stop. Most reports mention at least thirty attendees, though some say that as many as fifty or more cycled through during the two-hour event. People spoke, shared stories about their friend, read poetry, played music. Many, many tears were shed. This was just like any other memorial service held here in Second Life except for one huge difference: no one had died.

The Wife aka Wanda

We’ll call them Wanda and Paco. Wanda told me that they met when he performed in a club where they both worked. They “hooked up” and within a few months they married in SL. They were happy, as most newlyweds in any world tend to be. So happy, in fact that they had a SL baby.

“In those early days things between me and Paco were wonderful,” Wanda told me, “He was loving, kind and generous. On quite a few occasions we discussed becoming a RL couple. He even got on my Facebook page and said he was my husband in RL. I really thought that we would be together forever in SL and in RL,” she gushed.

But along the way a darkness of some kind seemed to creep in; things began to go very, very wrong.

“Right after the SL wedding he got very possessive of me. He started to accuse me of cheating on him. He started to chase my friends away by IMing them and telling them to leave me alone.” In response to my direct question Wanda said, “I was 100% faithful to him. But the accusations just got worse and worse.”

I asked Wanda why they had never hooked up in RL, as they had talked about together a number of times. “No way I was going to meet him in person. By this time I feared for my life.”

The Deceased aka Paco

“It all started back in April when I partnered with Wanda here in SL. I’m divorced in RL and she told me she was, too. So we got together and yes, you can find love on here. We would Skype when I wasn’t singing and I did a few things on Skype with her that I shouldn’t have,” he confessed. “I didn’t know she was taking screen shots of me.”

“I found out that she was cheating on me in SL, so I broke it off with her, and she begged me to come back. Like a fool I took her back because I had feelings for her. We was (sic) supposed to take it RL until one night on Skype I heard a man’s voice in the background asking her if she was coming to bed any time soon. She then said she had to go. We got into a fight and I found out she was still married in RL.”

At this point, he seemed to break down a little bit emotionally, asking to be excused for a moment. He said that he had gotten so upset discussing this that he had trouble typing.

“Eventually I ejected her and banned her from my land and group and unpartnered her in SL. She began to send the Skype photos of me to various people, and then she and her friend Rob started coming to my shows harassing me. A lot of venues banned them from my shows. That’s when they brought in the alts to stalk me. Yes, I messed up in faking my death, but I did it to escape her blackmail attempts.”

The Friend

I first took an interest in Francine when I recognized her as the manager for a SL singer (not Paco). She told me she had known Paco since he first logged onto SL. At first he performed at her venue, and later they became personal friends. I asked her about him.

“Paco just seemed to be a good old boy. But he was dating several women in SL, and I know that one of them began sending out X-rated photos of him to RL and SL contacts. I’m certain they were blackmailing him with them. I do know that some were sent to the owners of SL music venues. He was very upset over this.” At that point she claimed to not know the name of the woman she says sent out these photos.

“But I know that Paco told her that he was having some serious surgery and that he might not be back to SL for a while. Apparently, for some reason, he did not have the surgery, but he did not immediately return to SL, either. That’s when this woman started telling my SL friends that Paco had died.” I asked Francine directly if she felt that Paco had tried to hoax anyone in all of this. “No I don’t. If you ask me where this all started I would say it was that woman.”

I mentioned Wanda’s name, and sent Francine a copy of the note that circulated announcing Paco's death. She jumped right on it. “That’s her! She was the one who was sending out the pictures. What you just sent me is the note that she was sending out to people in SL about his death.”

I asked Francine if she attended the service that was held in SL. “Yes. But all along I did not think he had died. I know his RL name and was unable to find any obituaries for him. I do think that those two - Wanda and Rob - had caused serious issues for him.” When asked why they would harass him, Francine said, “He dated and married her - and it seemed like there was a lot of dishonesty going on between them.”

The Matriarch

I met with Vanessa and her SL partner Oliver in their spacious and well-appointed SL home. I asked them how they knew Paco. “The first thing I recall about him was that he was professing undying love for my SL little sister Kimberly. I’m very protective of her, due to her having some RL health challenges. She has not a mean bone in her body. I was very hesitant to allow him to get too close to her.”

“At the memorial that we attended, they were collecting lindens to help care for Paco’s RL son, and to help with RL funeral expenses,” Vanessa said. Oliver added, “If they knew he wasn't dead, this was a fraud.”

No one really knows how much money changed hands at the memorial service. Despite having uncovered a copy of the actual chat log for the entire event, I could do no better than to ascertain that many people seemed to be giving - generously. I later talked to one SL couple who said that they had donated L$20,000 and that they were not alone in this generosity. Despite her “challenges” and living on a fixed income Kimberly scraped together her last L$5,000 and put it in the collection box.

So, some weeks later, acting on information provided by a SL resident, I paid a visit to a SL music venue; there he was! Onstage and singing his “not-so-dead” heart out. Same avatar, same name. When we chatted he was friendly and direct: “I didn’t intend for anyone to get hurt. But I was essentially being blackmailed.”

He confessed that he did, in fact, attend the memorial service in the guise of an alt. “But I didn’t take the money. I have no idea where that went.”

** ** **

No one I spoke with seemed to be willing to go on record with an honest recounting of what happened from A - Z. The lindens that were fraudulently collected turned up in SL a week later in the form of several donations to the inworld center for a legitimate cancer research organization.

Some said, “At least the money ended up being donated to a charity.” This is true. However, the person who did end up with the money from the memorial service can unfairly claim the donation to charity as a tax deduction. Second, the many people who “donated” were not given the truth about the situation. Certainly, a number of them may have chosen to not donate if they knew what was really going on.

Besides, I’d like to point out that the linden ripoff represents only a small part of the damage done by this episode. The greater tragedy lies in the broken trust that everyone involved was forced to suffer. When a SL friend “dies” it hits us very deeply. And when we learn that our grief was a result of deceit, fraud and theft, some get hurt so badly that they can never again feel safe and trusting in Second Life.

For the rest of us - Caveat emptor: "Let the buyer beware"

(c) Copyright 2012 Traci Nubalo. All rights reserved.


  1. Thank you Traci for shedding the light on what happened. It was a thorough article and you investigated it well. It's good to hear both sides of the story.

    I used to perform every week at the venue which hosted Paco's memorial service. I heard from friends that you were investigating what happened at the service and word got out that Paco had faked his own death and defrauded money off those who attended. As the weeks went by and Paco was performing again at that venue I began to feel more and more uncomfortable at performing shows there, partly because it was one of the few refuges that would allow Paco to continue singing at and I didn't want to be associated with him no matter how indirectly. In the end this venue had to close down and it did so halfway through a day of events and shortly after Paco's show.

    I am friends with the venue owner and enjoyed performing there because I could tell the owner genuinely appreciated my music. I had to IM them before my show to confirm that I wouldn't be performing there today. Without prying too much as to why, the owner told me among the reasons for closing the venue down was that some unfavorable audience members had attended an earlier show to jeer at the musician - maybe Paco's known harassers but maybe, with word of his fraud, ordinary people with no prior grudge turned on him too. The venue owner organized the memorial service along with the donations and then they allowed him to sing at the venue after his 'death'. I'll never know but I'm quite certain that the venue owner was not in on the deception. They knew nothing of his fake death and treated it as genuine. What's going to be difficult for them though is trying to convince other people that this is the case.

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