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UK Gang Caught After $750K Online Music Fraud Scam 101

Posted by timothy
from the dj-felonious dept.
LSDelirious writes "10 individuals in the UK have been arrested in connection with an online fraud gang, whereby the group created several songs, had the songs uploaded to iTunes and Amazon, then used thousands of stolen credit cards to repeatedly purchase the songs from these services. It is estimated that they charged approximately $750,000 worth of fraudulent purchases, netting the group over $300,000 in royalties payments."
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UK Gang Caught After $750K Online Music Fraud Scam

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  • by P1aGu3ed (979864) on Friday June 12, 2009 @12:49AM (#28304681)
    I say we go back to the outdated model of printing CDs and using stolen credit cards to buy boxes of them. So much easier, and they would never have been caught. No really.
  • Follow the money (Score:4, Interesting)

    by QuantumG (50515) * <qg@biodome.org> on Friday June 12, 2009 @12:51AM (#28304689) Homepage Journal

    A new creative way to get cash off credit cards. Woop. At least it's better than getting goods delivered to a drop house and selling them at a pawn shop.

    • by Anonymous Coward on Friday June 12, 2009 @01:55AM (#28304943)

      Is it? A good drop house is a useful thing, and if you fence the goods properly, you're not easily traceable. It requires feet on the ground to catch you.

      This, on the other hand, is retarded. There's a simple digital "paper trail" right to your bank.

      • by QuantumG (50515) * <qg@biodome.org> on Friday June 12, 2009 @01:58AM (#28304961) Homepage Journal

        If you're a moron, yes.

        Money laundering is all about getting suckers to do your banking.

        • by vertinox (846076)

          Money laundering is all about getting suckers to do your banking.

          I got a spam email a few months back that sounded something to this effect. Basically they were looking to hire someone to deposit checks into someone else's bank accounts.

          Can't seem to find it so must have deleted it, but I thought it amusing because it basically was money laundering.

          • by jonbryce (703250)

            It's the second stage of the phishing scam. They break into people's accounts, transfer the money into your account, then you transfer it to them by Western Union or similar, or you buy stuff with the money and send it to them.

            When the phishing victim complains, the transfer is reversed and you are left out of pocket.

      • by jonbryce (703250)

        Usually you need to register the credit card to the same drop house. That can sometimes work, but it does make things more difficult, and there is a limit to the number of cards you can have at one address.

    • Re: (Score:3, Interesting)

      by physicsphairy (720718)

      Either way it is stupid to have some nexus to all of your crimes. The least they could have done was to buy iTunes gift certificates and *then* buy their own songs so it's not like the victim's credit card companies are sending them a bill saying a thousand songs were purchased from such and such band.

      They are also taking a big hit on their percentage.

      After thinking about it for a bit, this is my idea: you sell stuff on ebay that you don't have, but when someone buys it, you use the stolen credit card

      • by QuantumG (50515) *

        I think you just described one of those "Make $$$ From Home" schemes that the botnets run.

        Yes, that's right, there's scams that are not being run by *people* but by a network of infected computers. Depending on how many contingencies and upgrade paths for command and control there are, these things can be insanely difficult to shut down. There's something about computers hiring people to perform jobs that seem legitimate with no concept of the overall scam that is strangely erotic.

      • by julesh (229690) on Friday June 12, 2009 @03:15AM (#28305263)

        But if it is at all possible to shuffle money between bank accounts in an anonymous way (I have no idea whether it really is?)

        Yes it is. You use an advanced mechanism that isn't very popular these days, called "cash".

        • by jimicus (737525)

          Yes it is. You use an advanced mechanism that isn't very popular these days, called "cash".

          The problem with any serious quantity of cash - certainly in the UK where this fraud took place - is that people start to ask awkward questions. (In fact, at banks they're legally obliged to start asking awkward questions)

          Which is not to say there aren't other ways to launder money. Buy a car, insure it then drive it into the wall and abracadabra! You don't have £30,000 in unmarked notes which raises eyebrows. You've got a cheque for £20,000 from an insurance company. Yes you've

          • Re: (Score:3, Funny)

            If your laundered money is shrinking, then you're doing it wrong. Never put it in the dryer; you should always hang it out to dry.
          • Yes, but what did you use to buy the car? Buy a car worth over $10000 USD and the dealer will have to fill out a form describing the source of the funds. I don't think private parties have to do this, though.
      • by jonbryce (703250)

        That won't work. You need to set up something that means you receive money from a legitimate account. With the ebay sales, the money is coming to you direct from the stolen credit card, with only the plausible deniability that you didn't know it was from a stolen card. That transaction can still be reversed.

        • by Golddess (1361003)

          With the ebay sales, the money is coming to you direct from the stolen credit card

          Sounded to me more like Person B sells item to Person C (an item they do not have), Person C pays Person B through whatever, Person B then buys item from Person A using stolen credit card, then negotiates the shipping such that Person A ships direct to Person C.

      • by tattood (855883)
        The problem with this, is that you either need to buy the cards at an Apple store or online. If you buy it at the store, you need an actual credit card, and usually they only have the number and not the real card. This also exposes a person to another person, who could possibly be a witness. If you buy it online, Apple will ship you the physical iTunes gift card. You don't get the number online, so there is still an address that can be traced back to someone.
        • by hmar (1203398)
          I buy itunes cards at walmart. They take cash (so does the Apple store)
          • by Ironica (124657)

            I buy itunes cards at walmart. They take cash (so does the Apple store)

            True, but we're talking about how to use a stolen credit card number to buy them.

  • Nothing new... (Score:5, Insightful)

    by Manip (656104) on Friday June 12, 2009 @12:52AM (#28304699)

    Just traditional money laundering via a slightly new route. They used to do similar things with Auction Houses, they'd list an item of no real value and then buy it. Dirty money into clean money!

    • by Sulphur (1548251)

      Just traditional money laundering via a slightly new route. They used to do similar things with Auction Houses, they'd list an item of no real value and then buy it. Dirty money into clean money!

      Maybe they can get music piped into the prison laundry.

    • Re: (Score:3, Funny)

      by Anonymous Coward

      They used to do similar things with Auction Houses, they'd list an item of no real value and then buy it.

      Not too different from pretty much any auction dealing with modern art.

  • by santax (1541065) on Friday June 12, 2009 @12:53AM (#28304701)
    When compared to the 'guys who stick up for artists (and take 95+ % of the earnings' these guys are saints. Give them a medal! At least they made their own music!
    • Re: (Score:3, Funny)

      by bitt3n (941736)
      Furthermore, who's to say that all those credit card holders wouldn't have bought these songs anyway? Perhaps they should all get charged an extra convenience fee.
      • by Ironica (124657)

        Furthermore, who's to say that all those credit card holders wouldn't have bought these songs anyway? Perhaps they should all get charged an extra convenience fee.

        I'm sure the RIAA's position would be that the legitimate card holders would have paid good money to buy the songs if these meddling criminals hadn't gotten in the way of the transaction... and if the band had been represented by a major label.

        Of course, what I wonder is, do the original card holders now own a license to listen to the music?

  • $30k each just doesn't seem worth it. What a waste of criminal talent.

    • Re: (Score:3, Insightful)

      by adavies42 (746183)
      they should have developed a thousand-dollar iphone app instead [wikipedia.org]
    • Re: (Score:3, Interesting)

      by carlzum (832868)
      Yeah, they should have just put the song on a Russian MP3 site and sued them for $1.65 trillion [cybernetnews.com]
    • by EdIII (1114411) * on Friday June 12, 2009 @01:57AM (#28304953)

      $30k each just doesn't seem worth it. What a waste of criminal talent.

      Talent? These guys are morons. You make it sound like they were Lex Luthor or something. Truthfully, I think Pinky and the Brain would of come up with a better plan.

      They created an artificial product. Maybe that is too harsh, I dunno. Their music could be decent for all we know. Putting this product up for sale on iTunes and then generating what was probably 99.99% fraudulent sales was a huge tip off. The fraud investigators would certainly label the musicians as prime suspects with such a percentage.

      Follow the money. Good judges do that, and so do good detectives.

      The person committing the fraud as the customer was receiving no money, just product. Is it a coincidence that nearly all of the customers were using fraud to obtain the product? Highly unlikely.

      The musicians selling their product to these customers, were receiving the money, laundered even.

      With so many damaged parties involved, I find it laughable that these criminals thought that nobody would even suspect the "musicians" of fraud and start to investigate them.

      • Re: (Score:2, Insightful)

        by Antidamage (1506489) *

        You sound like you read way too much into an offhand comment.

        • You sound like you read way too much into an offhand comment.

          Ah, you must be new here. Welcome to Slashdot ;)

      • Yes they were stupid. The real masterminds are the guys who sold them the credit cards.

      • by icoer (960357)
        Not to mention that NOBODY uses a stolen credit card to pirate music even if they liked it. They'd hop on the P2P of their choice and download it. Any song with that many "Sales" would be on all of them.
    • On the contrary, $30K each seems too much. Make it $5 each, and how many people will query it? Even if they do, the credit card companies are more likely to just eat the loss than pursue it (it will cost way more than $5 to recover it). With this sort of scam, hitting a lot of people for a small amount is a lot more lucrative (and less likely to get you caught) than hitting a smaller number for more.
  • And yet... (Score:5, Funny)

    by Anonymous Coward on Friday June 12, 2009 @12:59AM (#28304731)

    The Spice Girls remain at large.

  • by Anonymous Coward

    ...or stolen credit card *numbers*? TFA and TFS claim "cards". How exactly to you steal thousands of cards?

    • Re: (Score:3, Funny)

      by Plunky (929104)

      ...or stolen credit card *numbers*? TFA and TFS claim "cards". How exactly to you steal thousands of cards?

      Now listen carefully I will say this only once. Copyright infringement is not stealing!

  • by Shag (3737) on Friday June 12, 2009 @01:04AM (#28304759) Homepage

    ...and where can I get a torrent of them?

    • Seriously - are the songs still on iTunes and Amazon?

      With all this publicity, it's chance to sell them to the curiosity seekers (at least one copy...)
      • by zobier (585066)

        I don't see why not, it's not as if the music is illegal.
        I'm curious who this is and what the music sounds like too.

    • by Anenome (1250374) on Friday June 12, 2009 @01:31AM (#28304851)

      They were all third rate covers of "Money, money, money, money!"

      • Re: (Score:3, Funny)

        by flonker (526111)

        They sold so many copies, these songs were HOT!

      • So third rate, in fact, that they managed to get the number of "Money"s in the title wrong.

        Unless this is a medley of Pink Floyd's "Money" with Abba's "Money, Money, Money"? I'd pay good money to hear that.

        • Add that song by Barrett Strong, and that other song by John Lee Hooker, and you'll get the medley: "I Need Some Money, Money, Money, Money, Money, Money (That's What I Want)".
        • by daashton (1206008)
          I believe he was referring to "For the Love of Money" aka the money song by the O'Jays
          • If that were the case, surely he would have said something along the lines of "They were all third rate covers of 'For the Love of Money' aka the money song by the O'Jays"?

        • by Megane (129182)
          Especially if they could get Eddie Money to do the vocals.
      • by Anenome (1250374)

        Essentially, they invented a crappy form of money-laundering. It's actually fairly inventive and will become a larger problem with the expansion of small-time produced media.

        No doubt this is occurring on a smaller scale already. These guys got caught not really by Itunes but by the stolen credit cards. If the source of the money were not stolen, there would be no effective way to detect this. It's like 21st century pork-belly future!

    • by xaosflux (917784)

      If they had any quality they are are likely out there. It would be interesting to find out how prevalent they are, so these 'artists' can come up with a figure for how much all that illegal file sharing is costing them!

  • by Anonymous Coward on Friday June 12, 2009 @01:47AM (#28304903)

    Remember when they first came in in the UK?

    The premium rate phone number renter was paid their cut monthly by BT.

    But ordinary subscribers are billed quarterly.

    So here's how some people made a lot of money.....

    Start two companies. One of them rents a load of premium rate numbers and phone lines. The other rents a load of ordinary phone lines.

    Company 2 then calls Company 1's premium rate lines incessently.

    For three months in a row, Co1 gets cheques from BT.

    At the start of Month 4 both companies get phone bills.

    At around the start of Month 6 Co 2 gets final reminders, and is possibily cut off from service and threatened with all sorts of legal actions.

    But, no matter, both Companies have vanished with around 6 hefty BT cheques.

    Profit!

    • by Anonymous Coward on Friday June 12, 2009 @08:49AM (#28307367)

      Listen to this one then; you open a company called the Arse Tickler's Faggot Fan Club. You take an advert in the back page of some gay mag, advertising the latest in arse-intruding dildos, sell it a bit with, er... I dunno, "does what no other dildo can do until now", latest and greatest in sexual technology. Guaranteed results or money back, all that bollocks. These dills cost twenty-five each; a snip for all the pleasure they are going to give the recipients. They send a cheque to the company name, nothing offensive, er, Bobbie's Bits or something, for twenty-five. You put these in the bank for two weeks and let them clear. Now this is the clever bit. Then you send back the cheques for twenty-five pounds from the real company name, Arse Tickler's Faggot Fan Club, saying sorry, we couldn't get the supply from America, they have sold out. Now you see how many of the people cash those cheques; not a single soul, because who wants his bank manager to know he tickles arses when he is not paying in cheques!

      -- Tom

      • Re: (Score:2, Interesting)

        by bertoelcon (1557907)
        Why do the most ridiculous plans happen to sound the most plausible. Any less and it would be an obvious scam but for some reason you turn up the insane knob past 100% and the suspicion meter drops to like 5%.
  • ... Were the songs any good?

  • Copy(right)cat (Score:5, Insightful)

    by nausea_malvarma (1544887) on Friday June 12, 2009 @01:55AM (#28304947)
    A criminal gang that scams people out of their money with recorded music? Looks like the RIAA is inspiring copycat crimes.
  • So... (Score:1, Insightful)

    by Anonymous Coward

    Do Apple/Amazon keep their cut?

    • i don't see why not. In Apple's case, they don't own the music, they just charge for the bandwidth usage and credit card transaction fees. Not sure if Amazon is the same way.
      It would be the right thing for them to return their cut since it's only chump change for them, but who knows if they'll actually do it.
      • Re: (Score:3, Informative)

        by mike2R (721965)
        Hmm, I'd have thought quite the reverse. iTunes and Amazon are the merchants here as I understand it; they've charged the cards and hold the funds. Presumably they have then paid out commission to these crooks for the "sales".

        So now that the fraud has been spotted, the card holders will obviously do chargebacks, and since they obviously had no part in these transactions their card issuers will refund them, same as for any other fraudulent use of a card.

        And as for any other chargeback, the banks will si
  • The BBC is reporting that nine people were arrested. Six men and three women. And not ten like many other articles are reporting.

    http://news.bbc.co.uk/2/hi/uk_news/england/london/8094748.stm [bbc.co.uk]

    Nevertheless what everyone is really waiting other than the name's of the individuals arrested obviously...are the names of the albums that they put up.

    As soon as their real and DJ names are released we can find out what albums they worked on and see if those compilations were actually good. I wonder if they'll get enoug

    • by cyssero (1554429)
      Wow, this changes everything!
    • by julesh (229690)

      I also wonder if Amazon/I-Tunes will have to forfeit the money?

      You mean from any legit sales they get? I'd imagine not, but the gang themselves probably wouldn't be allowed to benefit -- the money owed to them would likely be seized using the Proceeds of Crime Act, which gives the government very wide ranging powers to take criminals' posessions without having to actually prove they were obtained illegaly.

      On the whole, though, Amazon and iTunes will lose out here. They'll have had thousands (if not more)

    • Re: (Score:3, Funny)

      by SnowZero (92219)

      The BBC is reporting that nine people were arrested. Six men and three women. And not ten like many other articles are reporting.

      That's because Keyser Soze got away.

  • Where dem tracks at?? This should be the most authentic gangster music!! Almost sounds like a project vom Weird Al ...

  • I would really love to have one of these songs (I often use musically esoteric materials in my classroom). The article doesn't mention what the music was. Anyone know? From other sources?

  • by Speare (84249) on Friday June 12, 2009 @07:47AM (#28306689) Homepage Journal

    I think "from the felonious-monk dept." has a better ring to it.

  • it's pretty much how every label started.
  • by Punto (100573) <puntob.gmail@com> on Friday June 12, 2009 @08:56AM (#28307463) Homepage

    that's nothing, in the process of pulling off this scam, they lost $2 billion to piracy! nobody's safe!

  • Sounds like something Metallica would do.
  • by noidentity (188756) on Friday June 12, 2009 @10:04AM (#28308497)

    UK Gang Caught After $750K Online Music Fraud Scam

    Let's see, at $150K per song [geek.com], that comes out to 5 songs.

  • As a form of basic theft, that has got to be one of the all-time dumbest, most inefficient ways to steal money. --Giving a massive percentage to Amazon and to the manufacture of CDs. It's also one of those schemes which isn't even a scheme; you'd think that an important part of any basic plan to commit a crime would be to get away with it afterwards. It seems that they left the whole, "Don't Get Caught" portion off the menu, because really, how the heck did they expect to NOT get caught when leaving such

  • Honestly, did you think you would get away with it? Anything involving digits and plastic is easy to trace. You are better off robbing for cash.

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