Ben

–matt

1 - The L$ I put in Ginko were actually my tier stipends. Mostly “free money” (well, not that free but you get the idea), so I had already written off that money as “lost”.

2 - 0.09% doesn’t *sound* as such a high rate. This is a clever ruse used to hide the fact that the interest rate is in excess of, say, my Credit Card (which is 43% APR, very expensive). Living in Mexico, I am no stranger of things like this, back in the ‘94 market crash, supermarkets started showing prices for “half-kilos” instead of “kilos” so people wouldn’t see the price had gone 100% up.

3 - They had been the main bank. I actually found the Ginko ATM without knowing what the thing was in the first place! And they had lasted long enough to give some kind of trust. Then again, so did Ponzi … too bad it has been 7 years since I read about that Ponzi incident.

As an interesting note: I work in a RL bank. So even those of us that *do* know about finances screw up from time to time …

In the case of the latter, I think it’s a jerk move but it’s also basically entertainment in the end. That isn’t the case for SL though. This wasn’t a “game bank.” This was a group taking effectively real money. (Yeah, I know the boundaries there are not clean and that the existence of grey/black markets for currency trading in entertainment worlds really muddies things.)

–matt

You are aware of the… events in Eve Online, right?

For example;

The head of the Eve Investment Bank, a massive scheme with a reasonable return rate and a good-sized staff, walked off with 700 billion ISK because he got so sick and tired of a few people on the forums calling him a scammer he decided to BE one.

(Without telling the staff. But interestingly, the 200 billion ISK he left so all the private investors could be paid back? Never seen again…)

And there’s been other instances of fraud as well. And under their in-game rules? You can bite CCP, they’re not giving you your ISK back.

It’s also important to remember that finance is still a mysterious field for some people. This scam worked like a bank: you put money in and got interest (it just happened to be a LOT of interest). But, people don’t understand that in order to pay that interest, the bank has to use that money and earn more money on it, often in the form of loans. For some people, the bank is like the grocery store: it just gets food, they don’t understand the whole agricultural infrastructure behind it.

But, as other people have pointed out, it’s the greed aspect that lets people get suckered in in the first place. A person paying attention should know that something like this is a scam. Unfortunately, greed allows that part of your brain to be silenced too easily.

My thoughts.

People who would give money to anyone claiming to pay an almost 70% APR clearly either knows absolutely nothing about money, or is willing to take a huge gamble. It’s like putting your money on a single number on the roulette table, except if your number hits, you only get 168.4%

The only person I know of capable of making such an investment and getting all the earnings and initial investment back is Hilary Clinton.

http://www.playnoevil.com/serendipity/index.php?/archives/1310-Multilevel-Marketing-for-Games-And-a-Bit-of-Info-on-Pyramid-Schemes.html

The FTC actually has a great little “cheat sheet” for identifying them.