

Scamville: The Social Gaming Ecosystem of Hell - raptrex
http://www.techcrunch.com/2009/10/31/scamville-the-social-gaming-ecosystem-of-hell/

======
patio11
The affiliate industry is rife with this, too. Ringtones, etc are essentially
financed by reverse billing fraud (the "sign up for our free trial and you'll
be billed $9.99 a month without being able to cancel"), and with the way CPC
advertising works this tends to crowd out all other advertisers because if
you're a fraud you have staggeringly higher LTV than legitimate businesses,
meaning you can afford to outbid them.

It isn't just affiliates, either: many shareware developers have inadvertently
caused their customers damage when their payment processor tacks on high-
margin low-value items as a rider to transactions. I covered this on my blog
here:

<http://www.kalzumeus.com/2008/03/09/regsoft-scam/>

In addition to the outright fraud discussed in that example, many payment
processors will do things like offer customers $10 for "download recovery"
service, where they promise to keep your download on file for a year so you
can get it again. This obviously costs them essentially nothing. That isn't
zero value (I suppose, theoretically, the shareware developer could go out of
business and stop offering downloads), but it mostly takes advantage of
unsophisticated customers who THINK they are buying "Get my software back if
my computer melts" and are unaware that almost all shareware authors will do
that for free.

(Wow, I'm finding myself agreeing with Arrington.)

~~~
hop
Fiscal darwinism.

~~~
caffeine
Not sure why you were downvoted so much - fiscal darwinism is exactly what it
is. We appear to have poorly calibrated selection pressures in these
industries: bad regulation and stupid users. Therefore "fitness" in such an
area involves fraud, vast numbers of young / unsuspecting users, and opaque
advertising/pricing.

------
chris123
Speaking of scams and scam companies, I’m dealing with a company named
MindJet, which makes a mind mapping program called MindManager, which I wanted
to test against the open-source programs. BTW, the open-source programs are
better, as one might expect.

Before purchasing the software (to test) I contacted the company to ask about
the software itself, as well as their refund policy. I was emailed back by
Christian Walter, who said they offered a 30-day money back guarantee.

I purchased the software, tried it, determined that it did not meet my needs,
to put it nicely, and certainly was not something that was worth any money.
Therefore, I emailed the company to request my refund. This is where the fun
starts.

When I requested my refund, Christian at MindJet effectively denied the
request (in my opinion) and told me I would have to download a form, swear on
it, sign it, and fax it to an international number.

On the form it said all fields must be completed or else no refund. One of the
fields was “Customer Number,” which it says is listed on your invoice. That is
not true (at least not on the invoice I have, nor anywhere on "my" account on
their website).

The other part of their scam (that's what I call this kind of business
practice) is that when you buy the product they throw in a “free” year of
support. What they don’t tell you is that this is really a subscription for
_paid_ support, with the first year free, and that they will bill you annually
starting next year unless you: (1) figure this out, (2) figure out how to opt
out, and (3) do it in time.

I’m still dealing with this MindJet issue, gathering info for a detailed blog
post with screenshots. Tune in later to see how the story ends, if they refund
me on their own or I have to dispute the charge with Mastercard (I’ve already
met the requirements to dispute the charge and am just waiting to see what
they will do).

In meantime, I can tell you that, based on this experience (on its own and in
comparison with every other company I have ever done business with), I
consider MindJet a scam company. If their business practices are legal, they
seem at least highly deceptive, tricky, and unethical (to me). Again, this is
only my experience and opinion, so take it for what it's worth.

~~~
robotrout
I use Mindjet and have for years. They're not a "scam company". If anybody was
scamming, it seems like it was you. Your obvious plan was to get the software,
write a bad review of it, and then ask for your money back. You get an article
for your blog with no financial impact to your wallet. Now, when that
backfired, you're indignant. I have to say, I'm not feeling that sympathetic
to your predicament.

~~~
chris123
Wow robotrout, your thought process says a lot about your outlook on life and
people, which says a lot about you.

Could it be that I wanted to evaluate all of the mind mapping products on the
market before deciding which one to go with? Is that not a what many people do
before they make any major decision, which to me is what picking a new piece
of business software is? Could it be that I did some initial research and came
up with a short list of candidates (Freemind, XMind, Mindjet MindManager,
Dropmind, and NovaMind)? Could it be that I have now concluded my evaluation
and MindJet was not the product for me and I simply tried to exercise my
money-back option?

I am not "indignant," I am reporting facts, facts which, IMHO, mean "scam." If
other customers who are eligible for refunds and want refunds are ok with
having to fill out, swear to, sign, and fax a form to an international number
to get that refund, then that's ok (for them). If they are ok with the refund
request form saying they must supply a customer number from their invoice and
there is no customer number on their invoice, fine. I'm just reporting those
facts. Doesn't seem like a good policy to me, but if it's fine with you, fine.
But don't get pissy and accusatory with me.

Lastly, nothing has backfired. I will get my refund from them or through
MasterCard chargeback. The reason I'm spending my time telling people about
this situation is in case anyone finds it relevent in their dealings with
MindJet or in how they handle refund policies and procedures, as a previous
commenter stated.

MY INITIAL QUESTION TO MINDJET:

I am interested in your mind-mapping software, but it is expensive. Does it
come with a money back guarantee?

THEIR REPLY:

When you purchase MindManager in the Mindjet online shop you can cancel your
order within 30 days after the purchase.

FOR THE RECORD robotrout's ORIGINAL COMMENT TO WHICH MY ABOVE REPLY IS
DIRECTED:

I use Mindjet and have for years. They're not a "scam company". If anybody was
scamming, it seems like it was you. Your obvious plan was to get the software,
write a bad review of it, and then ask for your money back. You get an article
for your blog with no financial impact to your wallet. Now, when that
backfired, you're indignant. I have to say, I'm not feeling that sympathetic
to your predicament.

~~~
tom_rath
If you only wanted to evaluate their product, why didn't you use the free
trial available for download? I just checked that site now for the first time
myself and it was pretty obvious how to get one.

Refunds cost time and money to process and are a demoralizing pain in the tail
(fwiw, we provide our rarely requested refunds immediately with no hassle and
no questions asked) and a purchase with an immediate request for a refund
typically screams 'pirate'.

Your opinions seem belligerently set in place, so all I can offer is the
Independent Software Developer's Curse: "May you have customers who act just
as you do".

~~~
chris123
Good question, and yes, I should have just done a free trial. Reason I didn't
is because, based on the info on their site, I was "sure" I was going to buy
and keep the software. It had -- or I thought it had -- some key
differentiating features. As it turned out, the Mac version does not have
those features, only the Windows version. That's why. But yes, you're right, I
should have taken the free trial instead of being so excited and confident I
would want to keep the software. Consider my hand slapped :)

------
ramchip
Who the heck says someone's point is "shit, doubleshit, and bullshit" _when
sitting on a panel at a conference_?

Thinking about it, this might explain their attitude towards users...

~~~
vaksel
especially if that someone is Arrington, who you know is going to make it a
personal quest to destroy you.

~~~
hop
But I doubt the vast majority of Farmville and Mafia Wars read/care about
TechCrunch.

~~~
vaksel
they don't, but facebook does, and if techcrunch makes a big deal about them
profiting from this, it won't take long for them to intervene

~~~
mahmud
Facebook caring what Arrington thinks? On what planet?

------
numair
I love how Arrington refers to Slide as the "good guys." You know an ecosystem
is unbearably slimy when you have the spammers fighting the scammers for the
title of "good guy."

Facebook Platform is such a joke. Sad, too, when you know what the original
vision looked like.

~~~
jimmybot
What was the original vision?

------
zaidf
Totally with Arrington on this one. OfferPal CEO came across as a complete
jerk. Arrington's response was surprisingly chill and levelheaded.

~~~
teamonkey
We never heard what Arrington said to them. :)

------
bemmu
I love it that to the right of this post was TechCrunch advertising for "make
$1000/day from home!".

~~~
nikcub
we do what we can to filter those ads out on the page by maintaining a
blacklist in adsense. it isn't easy to manage, which is a whole other story

~~~
jlees
We had the same problem on a WoW site that would frequently end up with gold-
selling ads popping up no matter how hard we tried to firefight with
blacklisting. We got readers to submit every bad ad they could see, and even
pulled the ads at least once, because of the impact on our 'honesty' as
readers perceived us.

~~~
nikcub
I would love to drill into this topic because it is related to the main
thread. There are some networks and providers who care about the issue of
pushing bad ads, while others turn a blind eye since they have no incentive to
keep these ads off your site. Don't be surprised if the current series of TC
posts eventually lead into discussing ad networks.

For now, please email me (nik at tc) if you do see these ads popup, we dislike
them as much, if not more, than the readers do.

------
CapitalistCartr
I play some of those games in Facebook, and while I don't fill out anything
that wants me to pay a dime, they do seem to work exactly as he says. And the
eagerness with which Zynga, et al copy every other game and then try to out-
advertise their way to success comes across as amoral, too.

------
patio11
Incidentally, the comments at Techcrunch include an important post from James
of HotOrNot. Search for "We ran offers like this".

~~~
skmurphy
First two paragraphs from referenced comment:

We ran offers like this back in 2005 for a very short period of time at
HOTorNOT, that is until we realized what was going on. In a nutshell, the
offers that monetize the best are the ones that scam/trick users. Sure we had
netflix ads show up, and clearly those do convert to some degree, but i’m
pretty sure most of the money ended up getting our users hooked into auto-
recurring SMS subscriptions for horoscopes and stuff. When I hear people
defending their directory of deals by saying Netflix is in there, i am
reminded of how hotel pay-per-view has non-pornographic movies. Sure it gives
them good cover, but we all know where the money is made.

In the end, we decided to turn the offers off. Quite frankly, the offers made
us feel dirty, and pretty much on the same level as spammers. For us, the
money just wasn’t worth it. On top of that, we relied on our goodwill with
users and focused on growing by having a product and company that our users
liked. Our sense was that using scammy offers would make good money in the
short run, but would destroy our userbase in the end. Perhaps apps on facebook
don’t feel this pressure because facebook is so huge, and there are always new
people to burn.

~~~
fnid
The difference is that Facebook has to please the investors, rather than the
users. The investors want revenue and they want a good exit. They will be
increasingly upset if that exit never comes or it is at a lower valuation than
they want.

~~~
jbellis
This is talking about third party apps, not facebook itself.

~~~
gwern
Wasn't a major point of the article that Facebook is making a lot off the
third party apps?

------
hop
Then the VCs that fund Zynga are equally culpable for these scams -
<http://www.zynga.com/about>

Kleiner Perkins, Foundry Group, Union Square Ventures, Peter Thiel's Clarium
Capital, more...

~~~
motoko
I don't include Peter Thiel as equally culpable. As far as I know, Thiel
failed to invent a state-free currency with Max Levchin, and over decades, he
witnessed the defeat of uncompromising humanity over unconditional growth, and
now Peter Thiel probably understands himself as like the Adrian Veidt
character from the Watchmen.

That is my best hypothesis. Who has obsessed more about the cancers of human
behaviors than Thiel and his circle? He seems like a person who would feed
cancer now if he projected his culpability as minimizing E(cancer).

~~~
ryanwaggoner
...what?

~~~
motoko
Oh, I mean that I don't agree that Peter Thiel and his investment group is
"equally responsible" for the decay of ethics online because I don't think
Peter Thiel believes in money. I'm sure Peter believes YOU believe in money,
but he himself probably would prefer a world with some better way of storing
and moving wealth ---even if to get that world, he must sponsor companies he
himself does not like.

I don't know Peter Thiel; this is what I think from his writing and his past
history. PayPal was originally the "new world currency." There is an old
PayPal sticker on the pool table that says "PayPal: New World Currency" in
Molly's Tavern in Mountain View. I think Peter Thiel and Max Levchin meant
that literally... but, then their investors intervened to secure a safer cash
exit.

What do you do with your life when almost succeed to make an actual New World
Currency... but then people you trusted, they sell you out for millions of the
currency that you convinced yourself was a corrupt illusion?

------
jlees
What's interesting is how quickly you run up against scam-walls (as someone
who doesn't like paying for virtual currency outright, anyway). I can easily
see how users fall for it, even the smart ones who try to pick scams that
don't require credit card or mobile numbers.

As a user, though, it's really annoying to keep running up against the same
things in every single game out there. Want more acres of land? A bigger cafe?
Better weapons in Spymaster? The very omnipresence of 'give us your mobile
number/credit card and we'll abuse terribly small print to charge you money
for things you don't want' is making them almost acceptable, because people
are used to seeing them.

------
Tichy
"and are texted a pin code to enter on the quiz. Once they’ve done that,
they’ve just subscribed to a $9.99/month subscription"

How does that even work? I think in Germany to start such a subscription, one
would have to send a SMS to a specific number. Sounds as if in the US there
are other ways?

Or is it simply that a phone number equals a bank account? A company could do
the same if it could just get a person's bank account number, and just start
deducting money?

~~~
ahlatimer
I believe that by entering the PIN, you're agreeing to the contract. It seems
like total "shit, double shit, and bullshit" to me, but it doesn't seem
totally outside the boundaries of the law. Might be wrong, though, as IANAL.

~~~
NikkiA
Nope, the pin is purely a verification step for the points you're getting in
return for the scam-signup.

The legal 'opt-in' step that the scammer claims gives them the right to bill
you, is the 'enter your phone number for an SMS' step.

The opt-in probably won't be enough to satisfy the watchdog organisations that
overlook this kind of stuff (ofcom in the UK for example) but it will be
enough to broadside a legal complaint of simple fraud (ie, police
involvement), and thus send the complaint to the watchdog authority...

The reason they do this is, if they can avoid the police shutting them down
with a 'simple' investigation, then they get months upon months as someone
like ofcom investigate, and during that time they can rack up the profit, then
'run' (declare bankrupcy and hide the profit) when the watchdog authority
appears to be about ready to issue a fine.

(IANAL either, but have worked in the premium SMS industry, and seen this kind
of 'ofcom-stalling' trick)

------
axod
Obviously this is nothing new. Reward schemes and sites have been around for
10+ years, and are really profitable for those who run them. But the value
they give is debatable.

------
praptak
What really sucks is that a company can just pull money out of your account
without your actual consent. As long as this is possible, the scammers will
thrive.

Credit card companies and telcos should get their act together and stop this.
No more handling your wallet to the vendors.

~~~
Devilboy
At least credit card companies will refund you when you dispute a charge. The
whole 'pay to receive' SMS system is just horrible.

------
jfarmer
I agree with Arrington, but his article is long on rhetoric and short on
facts. He also totally mischaracterizes Anu's response to his claims, saying
she didn't address "any of his points," when in fact she addressed all three
of them directly.

------
vaksel
I think it's telling about that conference that the scammer company was given
a panel spot.

~~~
code_devil
The conference was on Virtual Goods Summit, and Offerpal gives you Virtual
Currency to buy those goods, so thats the reason she was on the panel.

I can see people paying 1 USD to earn 100 Virtual Coins, but they should be
made aware that it's a 1 way route. I also think having offers/surveys for
users is OK to earn Virtual currency, but as long as it's made clear enough to
them that they are getting themselves into a recurring charge of $10.99/mo.

~~~
swolchok
Speaking of a 1-way route, I was _really_ confused about Zynga Poker. I was
wondering what the value of the currency was, since poker with nothing on the
line is no fun. I was not able to determine that it actually had any, so I
quit playing after a day or two.

------
ivenkys
Who are the people who sign up for this scams ? Doesn't everyone know enough
about these apps to know that ?

~~~
dgabriel
Everyone who has previously fallen for these scams, or has enough experience
to understand that most of the offers are scammy. That leaves a lot of suckers
to be mined.

My nanny (a very nice, intelligent woman, but naive about such things) wound
up with a $500 cell phone bill last month after falling for a bunch of scams
in a single week.

~~~
ryanwaggoner
You have a nanny and you're posting on HN? How old are you?

~~~
ZachPruckowski
It could be that he has children himself, so "his nanny" watches over his
children and not over him.

~~~
ryanwaggoner
I was joking :) Stupid, I know.

~~~
dgabriel
There are days I wish I had someone to spoonfeed me applesauce and give me a
warm bath, then put me down for a nap. Alas, I can't afford that kind of
"nanny"...

------
sscheper
I think the next step will center on Facebook outlining rules against those
_ads that are deceptive_. I highly doubt Facebook doesn't want to put a stop
to it because "it makes Facebook a quick buck." The numbers they yield are a
fraction of a fraction of Facebook's revenue.

Those ads aren't the cash cows--they're small, extreme and unethical elements
that have slipped through the cracks of the application ecosystem. If you're
going after them, you might as well go after Google for allowing Acai Berry
ads to be shown on Google Adsense.

------
WesleyJohnson
I think calling this a "scam" is a bit strong. Exploitative of people willing
to cough up real money and sign up for questionable offers in order to earn
completely intangible goods? Sure, but I don't know if that qualifies as a
scam.

Still, without getting hung up on the verbiage, I agree that it's unfortunate
that they're trouncing all over the other developers who won't partake in
these tactics.

~~~
Grinnmarr
The worst of these offers, notably the SMS ones, are scams by any definition
and are only defended by people making money off of them or the typical forum
"devil's advocate" that in his/her ignorance find these practices to somehow
be defensible. The author gives very good examples in the article e.g. the IQ
test. It is an affront to all that is ethical and fair in market practices
that these kinds of businesses (the scam offers themselves) are even allowed
to exist at all.

~~~
WesleyJohnson
Fair points and perhaps I should have refrained from commenting until I had
clearer understanding of the types of offers this article is referring to. The
more I've read about some of the offers (sms in particular) in the article and
in the HN comments, I realize I spoke too soon.

